the reading

Robert Kreitner Angelo Kinicki

Both of Arizona State University

Organizational Behavior tenth edition

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ORGANIZATIONAL BEHAVIOR Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2013, 2010, 2008, 2007, 2004, 2001, 1998, 1994, 1992, 1989 by The McGraw-Hill Companies, Inc. All rights reserved. Printed in the United States of America. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

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ISBN 978-0-07-802936-3 MHID 0-07-802936-8

Vice president and editor-in-chief: Brent Gordon Editorial director: Paul Ducham Executive editor: Michael Ablassmeir Executive director of development: Ann Torbert Development editor: Kelly I. Pekelder Editorial coordinator: Andrea Heirendt Vice president and director of marketing: Robin J. Zwettler Marketing director: Amee Mosley Senior marketing manager: Michelle Heaster Marketing specialist: Elizabeth Steiner Vice president of editing, design, and production: Sesha Bolisetty Senior project manager: Dana M. Pauley Senior buyer: Michael R. McCormick Senior designer: Matt Diamond Senior photo research coordinator: Jeremy Cheshareck Photo researcher: Editorial Image, LLC Senior media project manager: Bruce Gin Media project manager: Balaji Sundararaman, Hurix Systems Pvt. Ltd. Cover and interior design: Cara Hawthorne, cara david DESIGN Typeface: 10.5/12 Times Roman Compositor: MPS Limited, a Macmillan Company Printer: R. R. Donnelley

Library of Congress Cataloging-in-Publication Data

Kreitner, Robert. Organizational behavior / Robert Kreitner, Angelo Kinicki. — 10th ed. p. cm. Includes index. ISBN-13: 978-0-07-802936-3 (alk. paper) ISBN-10: 0-07-802936-8 (alk. paper) 1. Organizational behavior. I. Kinicki, Angelo. II. Title. HD58.7.K766 2013 658.3–dc23 2011043477

www.mhhe.com

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Angelo Kinicki, DBA, is a professor, author, and consultant. He is a professor of management and has held the Weatherup/Overby Chair in Leadership since 2005. He also is a Dean’s Council of 100 Distinguished Scholar at the W P Carey School of Business. He joined the faculty in 1982, the year he received his doctorate in business administration from Kent State University. His primary research interests include leadership, organizational culture, organizational change, and multilevel issues associated with predicting organizational ef- fectiveness. Angelo has published more than 90 articles in a variety of academic journals and is coauthor of seven textbooks (25 including revisions) that are used by hundreds of universi- ties around the world. Several of his books have been trans- lated into multiple languages.

Angelo is an award-winning researcher and teacher. He has received several awards, including a best research paper award from the Organizational Behavior (OB) division of the Academy of Management, the All Time Best Reviewer Award (1996–99) and the Excellent Reviewer Award (1997–98) from the Acad-

emy of Management Journal, and six teaching awards from Arizona State University [Outstanding Teaching Award—MBA and Master’s Program, John W Teets Outstanding Graduate Teacher Award (twice), Outstanding Undergraduate Teaching Excellence Award, Outstanding Graduate Teaching Excellence Award, and Outstanding Executive Development Teaching Excellence Award].

Robert (Bob) Kreitner, PhD, is profes- sor emeritus of management at Arizona State University and a member of ASU’s W P Carey School of Business Faculty Hall of Fame. Prior to joining ASU in 1975, Bob taught at Western Illinois University. He also taught organizational behavior at Thunderbird. Bob has addressed a diverse array of audiences worldwide on management topics. He has authored articles for journals such as Organizational Dynamics, Business Hori- zons, Educational and Psychological Measurement , Journal of Organizational Behavior Management , and Journal of Business Ethics. He also is coauthor (with Fred Luthans) of the award- winning book Organizational Behavior Modifi cation and Beyond: An Operant and Social Learning Approach and coauthor (with Carlene Cassidy) of Management, 12th edition, an introductory management text. His textbooks collectively have been through 31 editions.

Among his consulting and executive development clients have been American Express, SABRE Computer Services, Honeywell, Motorola, Amdahl, the Hopi Indian Tribe, State Farm

Insurance, Goodyear Aerospace, Doubletree Hotels, Bank One–Arizona, Nazarene School of Large Church Management, Ford Motor Company, US Steel, and Allied-Signal. In 1981–82 he served as chairman of the Academy of Management’s Management Education and Development Division.

Bob was born in Buffalo, New York. After a four-year enlistment in the US Coast Guard, including service on the icebreaker EASTWIND in Antarctica, Bob attended the University of Nebraska–Omaha on a football scholarship. Bob also holds an MBA from the University of Nebraska–Omaha and a PhD from the University of Nebraska–Lincoln. While working on his PhD in business at Nebraska, he spent six months teaching management courses for the university in Micronesia. In 1996, Bob taught two courses in Albania’s fi rst-ever MBA program. He taught a summer leadership program in Switzerland from 1995 to 1998. Bob and his wife Margaret, a retired Intel Corp manager, live in Phoenix with their two cats Yahoo and Sweetie Pie. They enjoy world travel, lots of hiking, and fi shing in Alaska.

About the Authors

Bob and his wife Margaret atop 13,140-foot Boundary Peak (Nevada’s highest point).

Angelo with Na’vi at the Colorado Wolf and Wildlife center. Na’vi is a 40-pound Black Phase Timber Wolf.

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vi About the Authors

Angelo also has served on the editorial review boards for the Academy of Management Journal, Personnel Psychology, the Journal of Management, and the Journal of Vocational Behavior. Angelo has been an active member of the Academy of Management, including service as a representative at large for the Organizational Behavior division, member of the Best Paper Award committee for both the OB and Human Resources (HR) divisions, chair of the committee to select the best publication in the Academy of Management Journal, and program committee reviewer for the OB and HR divisions.

Angelo also is a busy international consultant and is a principal at Kinicki and Associates Inc, a management consulting fi rm that works with top management teams to create organizational change aimed at increasing organizational effectiveness and profi tabil- ity. He has worked with many Fortune 500 fi rms as well as numerous entrepreneurial organizations in diverse industries. His exper- tise includes facilitating strategic/operational planning sessions, diagnosing the causes of organizational and work-unit problems, conducting organizational culture interventions, implementing performance management systems, designing and implementing performance appraisal systems, developing and administering surveys to assess employee attitudes, and leading management/ executive education programs. He developed a 360-degree leadership feedback instrument called the Performance Management Leadership Survey (PMLS) that is used by companies throughout the United States and Europe. The survey is used to assess an individual’s leadership style and to coach individuals interested in developing their leadership skills.

Angelo and his wife Joyce have enjoyed living in the beautiful Arizona desert for 30 years and are natives of Cleveland, Ohio. They enjoy traveling, golfi ng, hiking, spending time in the White Mountains, and spoiling Nala, their golden retriever.

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With love to my precious little family, Margaret and our cats Yahoo and Sweetie Pie.

—B.K.

With respect and admiration to Dr William Spears. His work has reduced the carbon footprint of many schools, hospitals, and churches. He also is a role model for educators and entrepreneurs everywhere. I am proud to be his friend.

—A.K.

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par t one

The World of Organizational Behavior

1 Organizational Behavior: The Quest for People- Centered Organizations and Ethical Conduct

2 Managing Diversity: Releasing Every Employee’s Potential

3 Organizational Culture, Socialization, and Mentoring

4 International OB: Managing across Cultures

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Learning Objectives When you fi nish studying the material in this chapter, you should be able to:

LO.1 Defi ne the term organizational behavior, and contrast McGregor’s Theory X and Theory Y assumptions about employees.

LO.2 Identify the four principles of total quality management (TQM).

LO.3 Defi ne the term e-business, and describe the Net Generation.

LO.4 Contrast human and social capital, and explain why we need to build both.

LO.5 Defi ne the term management, and identify at least fi ve of the eleven managerial skills in Wilson’s profi le of effective managers.

LO.6 Characterize 21st-century managers.

LO.7 Describe Carroll’s global corporate social responsibility pyramid, and discuss the problem of moral erosion.

LO.8 Identify four of the seven general ethical principles, and explain how to improve an organization’s ethical climate.

LO.9 Describe the sources of organizational behavior research evidence.

Organizational Behavior: The Quest for People-Centered Organizations and Ethical Conduct

chapter 1

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There’s a good chance you have never heard of Tony Hsieh (pronounced “Shay”), CEO of Zappos.com. But if you are among the legions of satisfi ed and loyal custom- ers of the online retailer of footwear and other goods, you owe him an enthusiastic high fi ve. Initially as an investor/ adviser and eventually CEO, Hsieh guided Zappos from a struggling Internet start-up to a merger with Amazon. com in 2009 for $1.2 billion. Along the way, he helped Zappos develop a zany corporate culture of close-knit employees obsessed with great 24/7 customer service. “Customer Service Isn’t Just a Department!” trumpets the fi rm’s website. When the Amazon deal was announced, Hsieh told an all-hands meeting of employees that each of them would receive a free Kindle e-book reader and a retention bonus equal to 40% of their annual salary. Most importantly, he vowed to maintain the company’s cher- ished culture. The following excerpt from Hsieh’s new book, Delivering Happiness: A Path to Profi ts, Passion, and Purpose , highlights how Zappos.com came to put people—customers and employees—fi rst.

I e-mailed the entire company several times and got a lot of suggestions and feedback on which core values were the most important to our employees.

I was surprised the process took so long, but we wanted to make sure not to rush through the process because whatever core values we eventually came

Why Is Zappos.com So Good at Zapping the Competition? up with, we wanted to be ones that we could truly embrace. . . .

We eventually came up with our fi nal list of ten core values [from an initial list of 37], which we still use today:

1. Deliver WOW Through Service 2. Embrace and Drive Change 3. Create Fun and a Little Weirdness 4. Be Adventurous, Creative, and Open-Minded 5. Pursue Growth and Learning 6. Build Open and Honest Relationships with Com-

munication 7. Build a Positive Team and Family Spirit 8. Do More with Less 9. Be Passionate and Determined

10. Be Humble. . . .

Be Humble is probably the core value that ends up affecting our hiring decisions the most. There are a lot of experienced, smart and talented people we interview that we know can make an immediate impact on our top or bottom line. But a lot of them are also really egotisti- cal, so we end up not hiring them.

Our philosophy at Zappos is that we’re willing to make short-term sacrifi ces (including lost revenue or profi ts) if we believe that the long-term benefi ts are worth it. Protecting the company culture and sticking to core values is a long-term benefi t. 1

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4 Part One The World of Organizational Behavior

Tony Hsieh does more than just talk about the im- portance of his company’s people; he trusts, em- powers, and listens to them. No surprise then that Zappos.com ranked number 6 on Fortune ’s 2011 “100 Best Companies to Work For” list. 2 Hsieh helped create what Stanford University’s Jeffrey Pfeffer calls a “people-centered” organization. Research evi- dence from companies in both the United States and Germany shows the following seven people-centered practices to be strongly associated with much higher profi ts and signifi cantly lower employee turnover:

1. Job security (to eliminate fear of layoffs). 2. Careful hiring (emphasizing a good fi t 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). 3

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

According to Pfeffer, only 12% of today’s organizations have the systematic approaches and persistence to qualify as true people-centered organizations, thus giving them a competitive advantage. 4 To us, an 88% shortfall in the quest for people-centered organizations represents a tragic waste of human and economic potential. Pfeffer recently couched his call for greater people-centeredness in the “green management” term sustainability : “Just as there is concern for protecting natural resources, there could be a similar level of concern for protecting human re- sources.” 5 There are profound ethical implications as well, especially during the re- cent deep recession with millions of layoffs. At people-centered organizations (see Real World/Real People for an inspiring example), layoffs are a very last resort, not a knee-jerk fi rst response to bad news. Both practical experience and research tell us that layoffs hurt everyone, including the “survivors” who keep their jobs. A recent study of 318 companies led to this conclusion: “Three-fourths of 4,172 workers who have kept their jobs say their productivity has dropped since their organiza- tions let people go.” 6 Of course, layoffs are sometimes unavoidable. But imagina- tive people-centered organizations can make layoffs a last resort with tactics such as across-the-board pay cuts and/or reduced hours and voluntary unpaid leaves of absence. Additionally, consider these unique people-centered tactics:

Example. Vermont’s Rhino Foods, which makes the cookie dough for Ben & Jerry’s ice cream, recently sent 15 factory workers to nearby lip balm manufacturer Autumn Harp for a week to help it handle a holiday rush. The employees were paid by Rhino, which then invoiced its neighbor for the hours worked. President Ted Castle is looking to adopt a similar approach with salaried managers, too. “It’s a lot easier to just do the layoff,” says Castle. “But in the long term, it’s not easier for the business.” Matt Cooper, vice-president of Larkspur (Calif.) recruiting fi rm Accolo, asked employees to take fi ve days of unpaid leave this quarter but won’t dock paychecks until March. If big deals come through, he’ll lift the pay cut. 7

Each of us needs to accept the challenge to do a better job of creating and main- taining people-centered organizations, whatever our role(s) in society—employer/

Zappos’s CEO Tony Hsieh likes to mix hard work and fun at the online retailer.

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entrepreneur, employee, manager, stockholder, student, teacher, voter, elected offi cial, social/political activist. Toward that end, the mission of this book is to help increase the number of people-centered and ethically managed organizations around the world to improve the general quality of life. 8

The purpose of this fi rst chapter is to defi ne organizational behavior (OB); examine its contemporary relevance; explore its historical, managerial, and ethical contexts; and introduce a topical road map for the balance of this book.

Welcome to the World of OB Organizational 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 that employ, educate, connect, inform, feed, heal, protect, and en- tertain you. Cradle to grave, we interface with organizations at every turn. Ac- cording to Chester I Barnard’s classic defi nition, an organization is “a system of consciously coordinated activities or forces of two or more persons.” 9 Organiza- tions are a social invention helping us to achieve things collectively that we could not achieve alone. For better or for worse, they extend our reach. Consider the inspiring example of the World Health Organization (WHO):

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

On the other hand, organizations such as al-Qaeda kill and terrorize, and oth- ers such as failed banks and businesses squander our resources. Organizations are

organization System of consciously coordinated activities of two or more people.

Like countless small-business owners, Lola Gonzalez ago- nizingly resolved to trim her fi rm’s nine-person staff when the economic recovery began to sputter . . . [in early 2010].

Unlike other entrepreneurs, she picked an unlikely employee to lay off: herself.

The owner of Accurate Background Check in Ocala, Fla., says she couldn’t bear to fi re employees who have worked there for years. So she stopped paying herself a six-fi gure salary and got a job for less than half the pay as a social worker.

“How could you let somebody go that you trusted and that trusted you?” says Gonzalez, 51, who’s still a social worker. . . .

Employees initially froze in fear [during her announce- ment], then erupted in laughter. Until they realized she was serious. . . .

Besides putting in a 40-hour week, . . . Gonzalez gets twice-weekly phone updates on goings-on at her busi- ness and still does certain background checks herself without getting paid.

What are the broader, long-term benefits of this people-centered practice?

SOURCE: Excerpted from P Davidson, “How a Boss Saved Jobs: She Laid Herself Off,” USA Today , November 26, 2010, p 1B.

real WORLD // real PEOPLE: ethics Lola Gonzalez Laid Herself Off First!

TO THE POINT Why is it important to study organizational behavior, regardless of one’s organizational level or specialty?

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6 Part One The World of Organizational Behavior

the chessboard on which the game of life is played. To know more about organi- zational behavior—life within organizations—is to know more about the nature, possibilities, and rules of that game.

Organizational Behavior: An Interdisciplinary Field Organizational behavior, commonly referred to as OB, is an interdisciplinary fi eld dedicated to better understanding and managing people at work. By defi nition, organizational behavior is both research and application oriented. Three basic levels of analysis in OB are individual, group, and organizational. OB draws upon a diverse array of disciplines, including psychology, management, sociology, organization theory, social psychology, statistics, anthropology, general systems theory, economics, information technology, political science, vocational counsel- ing, human stress management, psychometrics, ergonomics, decision theory, and ethics. 11 This rich heritage has spawned many competing perspectives and theories about human work behavior. By 2003, one researcher had identifi ed 73 distinct theories about behavior within the fi eld of OB. 12

Some FAQs about Studying OB Through the years we (and our colleagues) have fi elded some frequently asked questions (FAQs) from our students about our fi eld. Here are the most common ones, along with our answers.

Why Study OB? If you thoughtfully study this book, you will learn more about yourself, how to interact effectively with others, and how to thrive (not just survive) in organizations. Lots of insights about your own personality, emotions, values, job satisfaction, perceptions, needs, and goals are available in Part 2. Rela- tive to your interpersonal effectiveness, you will learn about being a team player, building trust, managing confl ict, negotiating, communicating, and infl uencing and leading others. We conclude virtually every major topic with practical how- to-do-it instructions. The idea is to build your skills in areas such as self-man- agement, making ethical decisions, avoiding groupthink, listening, coping with organizational politics, handling change, and managing stress. Respected OB scholar Edward E Lawler III created the “virtuous career spiral” in Figure 1–1 to illustrate how OB-related skills point you toward career success. “It shows that increased skills and performance can lead to better jobs and higher rewards.” 13

If I’m an Accounting (or Other Technical) Major, Why Should I Study OB? Many students in technical fi elds such as accounting, fi nance, computer science, 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 will catch up with you and you will be tapped for some sort of su- pervisory or leadership position. 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, communication, confl ict handling, and negotiation skills and your powers of persuasion will be needed early and often. Jack Welch, the legendary CEO of General Electric, and Suzy Welch, the former editor of Harvard Business Review, offered this answer to a business school professor’s question about how best to prepare students for today’s global business environment:

Example. We’d make the case that the nitty-gritty of managing people should rank higher in the educational hierarchy. In the past two years we’ve visited 35 B-schools around the world and have been repeatedly surprised by how little classroom at- tention is paid to hiring, motivating, team-building, and fi ring. Instead, B-schools seem far more invested in teaching brainiac concepts—disruptive technologies,

LO.1

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Chapter One Organizational Behavior 7

complexity modeling, and the like. Those may be useful, particularly if you join a consulting fi rm, but real managers need to know how to get the most out of people. We hope you have the clout to make sure people management is front and center at your university. If you do, you’ll launch your students’ careers with a real head start. 14

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 cat- egory such as accounting, marketing, information technology, or fi nance. Students of OB typically do not get jobs in organizational behavior, per se. This reality in no way demeans OB or lessens its importance in effective organizational management. OB is a horizontal discipline cutting across virtually every job category, business function, and professional specialty. Anyone who plans to make a living in a large or small, public or private, organization needs to study organizational behavior.

A Historical Perspective of OB A historical perspective of the study of people at work helps in studying organi- zational behavior. According to a management history expert, this is important because:

Example. Historical perspective is the study of a subject in light of its earliest phases and subsequent evolution. Historical perspective differs from history in that the ob- ject of historical perspective is to sharpen one’s vision of the present, not the past. 15

organizational behavior Interdis- ciplinary fi eld dedicated to better

understanding and managing people at work.

fi gure 1–1 OB-Related Skills Are the Ticket to Ride the Virtuous Career Spiral

Job

Job

Rew ard

s

R ew

ar ds

Performance Skills

Motivation and Satisfaction

Performance Skills

SOURCE: Edward E Lawler III, Treat People Right! How Organizations and Individuals Can Propel Each Other into a Virtual Spiral of Success, Jossey-Bass, 2003, p 21. Reprinted with permission of John Wiley & Sons, Inc.

TO THE POINT What lessons from McGregor and Deming can help managers build human and social capital?

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8 Part One The World of Organizational Behavior

In other words, we can better understand where the fi eld of OB is today and where it appears to be headed by appreciating where it has been and how it is being redirected. 16 Let us examine four signifi cant landmarks in the understanding and management of people in the workplace.

1. The human relations movement. 2. The quality movement. 3. The Internet and social media revolution. 4. The age of human and social capital.

The Human Relations Movement A unique combination of factors during the 1930s fostered the human relations movement. First, following legalization of union–management collective bargain- ing in the United States 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 factories heeded the call for better human relations and improved working conditions. One such study, conducted at Western Electric’s Chicago-area Hawthorne plant, was a prime stimulus for the human relations movement. Ironically, many of the Hawthorne fi ndings have turned out to be more myth than fact.

The Hawthorne Legacy Interviews conducted decades later with three subjects of the Hawthorne studies and reanalysis of the original data with modern statistical techniques do not support initial conclusions about the posi- tive effect of supportive supervision. Specifi cally, money, fear of unemploy- ment during the Great Depression, managerial discipline, and high-quality raw materials—not supportive supervision—turned out to be responsible for high output in the relay assembly test room experiments. 17 Nonetheless, the human relations movement gathered momentum through the 1950s, as academics and managers alike made stirring claims about the powerful effect that individual needs, supportive supervision, and group dynamics apparently had on job performance.

The Writings of Mayo and Follett Essential to the human relations movement were the writings of Elton Mayo and Mary Parker Follett. Australian-born Mayo, who headed the Harvard researchers at Hawthorne, ad- vised managers to attend to employees’ emotional needs in his 1933 classic The Human Problems of an Industrial Civil- ization. Follett was a true pioneer, not only as a woman management consultant in the male-dominated industrial world of the 1920s, but also as a writer who saw employees as complex combinations of attitudes, beliefs, and needs. Mary Parker Follett was way ahead of her time in telling managers to motivate job performance instead of merely demanding it, a “pull” rather than “push” strategy. She also built a logical bridge between political democracy and a cooperative spirit in the workplace. 18

McGregor’s Theory Y In 1960, Douglas McGregor wrote a book entitled The Human Side of Enterprise, which has become an important philosophical base for the modern view of people at work. 19 Drawing on his experi- ence as a management consultant, McGregor formulated

These relay assembly test room employees in the classic Hawthorne Western Electric studies turned in record performance. Why? No one knows for certain, and debate continues today. Supportive supervision was long believed to be the key factor. Whatever the reason, Hawthorne gave the budding human relations movement needed research credibility.

Go to www.mcgrawhillconnect.com for an interactive exercise to test your knowledge on the history of organizational behavior.

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Chapter One Organizational Behavior 9

two sharply contrasting sets of assumptions about human nature (see Table 1–1). His Theory X assumptions were pessimistic and negative and, according to Mc- Gregor’s interpretation, typical of how managers traditionally perceived employ- ees. To help managers break with this negative tradition, McGregor formulated his Theory Y, a modern and positive set of assumptions about people. McGregor believed managers could accomplish more through others by viewing them as self- energized, committed, responsible, and creative beings.

Unfortunately, according to ongoing research on employee engagement , McGregor’s Theory Y is still a distant vision in the American workplace:

Example. The August 2009 Gallup Employee Engagement Index reported that only 33 percent of workers are engaged in their jobs, 49 percent are not engaged, and 18  percent are actively disengaged. The Gallup Organization defi nes the categories as follows: Engaged employees work with passion and feel a profound connection to their company. They drive innovation and move the organization forward. Non-engaged employees have essentially “checked out.” They sleepwalk through workdays. They put in time but don’t approach their work with energy or passion. Actively disengaged employees aren’t just unhappy at work; they’re busy act- ing out their unhappiness. Every day, these workers undermine what engaged co- workers accomplish.

OUTDATED (THEORY X) ASSUMPTIONS ABOUT PEOPLE AT WORK

MODERN (THEORY Y) ASSUMPTIONS ABOUT PEOPLE AT WORK

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

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

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

2. People are capable of self- direction and self-control if they are committed to objectives.

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

3. People generally become committed to organizational objectives if they are rewarded for doing so.

4. The typical employee can learn to accept and seek responsibility.

5. The typical member of the general population has imagination, ingenuity, and creativity.

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

SOURCE: From D McGregor, The Human Side of Enterprise, McGraw-Hill, 1960, Ch 4. Copyright © 2008 The McGraw-Hill Companies. Reprinted with permission.

Theory Y McGregor’s modern and positive assumptions about employees being responsible and creative.

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10 Part One The World of Organizational Behavior

Gallup researchers, who base the Employee Engagement Index on a survey of nearly 42,000 randomly selected adults, estimate that disengaged workers cost US businesses as much as $350 billion a year. 20

Employee engagement, and many ways to improve it, are discussed in later chapters.

New Assumptions about Human Nature Unfortunately, unsophisti- cated behavioral research methods caused the human relationists to embrace some naive and misleading conclusions. 21 For example, human relationists believed in the axiom, “A satisfi ed employee is a hardworking employee.” Subsequent re- search, as discussed later in this book, shows the satisfaction → performance link- age to be more complex than originally thought.

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

The Quality Movement In 1980, NBC aired a television documentary titled “If Japan Can . . . Why Can’t We?” It was a wake-up call for North American companies to dramatically im- prove product quality or continue losing market share to Japanese electronics and automobile companies. A full-fl edged movement ensued during the 1980s and 1990s. Much was written, said, and done about improving the quality of both goods and services. 22

Thanks to the concept of total quality management (TQM) and Six Sigma programs, the quality of the goods and services we purchase today is signifi cantly better than in years past. Six Sigma was developed in 1986 at Motorola by engi- neer Bill Smith to achieve an astounding 99.9997% quality target by eliminating defects and cutting waste. It was licensed to companies such as General Electric that became avid users. An estimated 35% of US companies have adopted Six Sigma.

Example. Six Sigma, broadly speaking, expresses a way of thinking about busi- ness problems that encourages precision and predictability. The mantra of Six Sigma “black belts” is DMAIC, for “defi ne, measure, analyze, improve, control.” The “sigma” refers to the Greek letter, which in statistics is used to measure how far something deviates from perfection. The “six” comes from the goal to be no more than six standard deviations away from that perfect measure. 23

The underlying principles of TQM and Six Sigma are more important than ever given customers’ steadily rising expectations:

Example. Establish a reputation for great value, top quality, or pulling late-night miracles in time for crucial client meetings, and soon enough, the goalposts move. “Greatness” lasts only as long as someone fails to imagine something better. Inevi- tably, the exceptional becomes the expected. Call it the performance paradox: If you deliver, you only qualify to deliver more. Great companies and their employees have always endured this treadmill of expectations. But these days, the brewing forces of technology, productivity, and transparency have accelerated the cycle to breakneck speed. 24

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The quality movement has profound practical implications for managing peo- ple today.

What Is TQM? Experts on the subject offered this defi nition of total quality management:

Example. TQM means that the organization’s culture is defi ned by and sup- ports the constant attainment of customer satisfaction through an integrated system of tools, techniques, and training. This involves the continuous im- provement of organizational processes, resulting in high-quality products and services. 25

Quality consultant Richard J Schonberger sums up TQM as “continuous, customer-centered, employee-driven improvement.” 26 TQM is necessarily em- ployee driven because product or service quality cannot be continuously improved without the active learning and participation of every employee. Thus, in success- ful quality improvement programs, TQM principles are embedded in the orga- nization’s culture. In fact, according to the results of a fi eld experiment, bank customers had higher satisfaction after interacting with bank employees who had been trained to provide excellent service. 27

The Deming Legacy Quality is in the corporate DNA today thanks in large part to the pioneering work of W Edwards Deming. 28 Ironically, the mathemati- cian credited with Japan’s post–World War II quality revolution rarely talked in terms of quality. He instead preferred to discuss “good management” during the hard-hitting seminars he delivered right up until his death at age 93 in 1993. 29 Al- though Deming’s passion was the statistical measurement and reduction of varia- tions in industrial processes, he had much to say about how employees should be treated. Regarding the human side of quality improvement, Deming called for the following:

• 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. 30

One of Deming’s most enduring lessons for managers is his 85–15 rule. 31 Specifi cally, 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 at fault. Unfortunately, as Deming observed, the typical manager spends most of his or her time wrongly blaming and punishing individuals for system failures. Statistical analysis is required to uncover system failures.

total quality management An organizational culture dedicated to training, continuous improvement, and customer satisfaction.

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

1. Do it right the fi rst time to eliminate costly rework and product recalls. 2. Listen to and learn from customers and employees. 3. Make continuous improvement an everyday matter. 4. Build teamwork, trust, and mutual respect. 32

Deming’s infl uence is clearly evident in this list. Once again, as with the human relations movement, we see people as the key factor in organizational success.

In summary, TQM advocates have made a valuable contribution to the fi eld of OB by providing a practical context for managing people. The case for TQM is strong because, as discovered in two comprehensive studies, it works . 33 When people are managed according to TQM principles, more of us are likely to get the employment opportunities and high-quality goods and services we demand. Organizations that lose sight of the TQM principle of continuous improvement do so at their own peril. When Chrysler’s once-popular PT Cruiser went out of production in 2010, one observer noted, “It’s a car that, initially, people loved. But the company then tried to squeeze as much profi t as it could out of the car, refus- ing to properly redesign it and eventually fi tting it with cheaper radios and interior materials to save a few pennies.” 34

As you will see many times in later chapters, this book is anchored to Deming’s philosophy and TQM principles—especially the idea of continuous improvement.

Back to the Chapter-Opening Case

What TQM principles are embedded in Zappos.com’s values and culture?

The Internet and Social Media Revolution In the early 1990s, when Internet start-ups were the rage, advocates said the Inter- net would change everything. Then came the tech crash of 2001 and the Internet promise was ridiculed as pure hype. But after some adolescent growing pains, the now-mobile Internet has in fact changed everything . Raw numbers are impres- sive: Internet users worldwide grew from 361 million in 2001 to nearly 2 billion by 2010. 35 What was once e-commerce (buying and selling goods and services over the Internet) has evolved into e-business, using the Internet to facilitate every aspect of running a business, including the management of virtual teams. 36 Said one industry observer: “Strip away the highfalutin talk, and at bottom, the In- ternet is a tool that dramatically lowers the cost of communication. That means it can radically alter any industry or activity that depends heavily on the fl ow of information.” 37

Another important shift in the Internet—enabled by social media innovations such as Facebook, LinkedIn, and Twitter—is the growing importance of user- generated content. Passive consumers of mass content (e.g., watching TV and movies and reading print media) have become creators and distributors of indi- vidualized content who blog, Facebook, and tweet whatever they like to whom- ever they like whenever they like. 38 This is hugely empowering for the individual consumer, employee, citizen, student, etc.

Example. [Social media entrepreneur] Amit Kapur envisions a Web that’s more about him. When he visits a news site, the headlines will be heavy on technology,

LO.2

LO.3

Go to www.mcgrawhillconnect.com for an interactive exercise to test your knowledge on The Net Generation.

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Chapter One Organizational Behavior 13

his passion; when we opens Yelp on his iPhone, the restaurant review app will al- ready know about his upcoming trip to San Francisco and recommend restaurants there. “I imagine this future where everywhere you go online or any application you open on your mobile device is in some way personalized to you and your in- terests,” says Kapur, 29. 39

New technologies such as smart phones, cloud computing, and augmented reality are important change drivers. 40 But relative to OB, we need to focus on how the evolving Internet has changed the behavior of those who have grown up with the Internet and take Google, Facebook, YouTube, and tweeting for granted. Don Tapscott, author of the intriguing book Grown Up Digital: How the Net Generation Is Changing the World , says the 81 million Americans born between January 1977 and December 1997 have a unique worldview shaped by the Internet:

Example. These are the eight norms of the Net Generation. They value free- dom—freedom to be who they are, freedom of choice. They want to customize everything, even their jobs. They learn to be skeptical, to scrutinize what they see and read in the media, including the Internet. They value integrity—being honest, considerate, transparent, and abiding by their commitment. They’re great collaborators, with friends online and at work. They thrive on speed. They love to innovate. . . . [I]f you understand these norms, you can change your company, school or university, government, or family for the twenty-fi rst century. 41

(Tapscott’s ideas about the Net Generation are expanded upon in Chapter 14.) In short, organizations and organizational life will never be the same because of the virtual world of the Internet 42 (see Real World/Real People).

In a 2007 issue of Scientifi c American , [Microsoft co- founder] Bill Gates predicted that the future would bring a “robot in every home.” In the foreseeable future, though, it may be a robot in every cubicle—or at least every third cubicle.

Industrial and technological companies across the globe are already hard at work trying to make this a reality. The QB, a “remote presence robot” created by Anybots, based in Mountain View, California, is basically a video- conferencing system on wheels. The QB, which looks a little like Wall-E, is controlled remotely through a Web browser and keyboard, allowing managers to virtually visit

satellite branches from the comfort of their offi ces. The $15,000 QB was unveiled in May, and according to Any- bots’ founder, Trevor Blackwell, sales are in the hundreds. “Everyone already has videoconferencing,” says Blackwell. “Yet planes are still full of people traveling for business.”

Where should managers draw the line between proper managerial oversight of remote workers and invading their privacy with electronic moni- toring technology?

SOURCE: Excerpted from E Spitznagel, “The Robot Revolution Is Coming,” Bloomberg Businessweek , January 17–23, 2011, p 70.

real WORLD // real PEOPLE: ethics Is Your Robot Watching Me?

e-business Running the entire business via the Internet and man- aging virtual teams.

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Managers are challenged to effectively communicate with, supervise, and lead widely dispersed individuals and teams linked via modern telecommunica- tions and Internet technology. The creation and management of virtual teams is covered in detail in Chapter 11 and virtual organizations are explored in Chapter 17.

The Need to Build Human and Social Capital Knowledge workers, those who add value by using their brains rather than the sweat off their backs, are more important than ever in today’s global economy. What you know and who you know increasingly are the keys to both personal and organizational success (see Figure 1–2). In the United States, the following “per- fect storm” of current and emerging trends heightens the importance and urgency of building human capital:

• Spread of advanced technology to developing countries with rapidly grow- ing middle classes (e.g., China, India, Russia, and Brazil).

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

• Comparatively poor math and science skills among America’s youth. • Massive brain drain caused by retiring post–World War II baby-boom

generation. 43

LO.4

fi gure 1–2 The Strategic Importance and Dimensions of Human and Social Capital

Strategic assumption:

People, individually and collectively,

are the key to organizational

success

Organizational learning

(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

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What Is Human Capital? (Hint: Think BIG) A team of human re- source management authors offered this perspective: “We’re living in a time when a new economic paradigm—characterized by speed, innovation, short cycle times, quality, and customer satisfaction—is highlighting the importance of intangible assets, such as brand recognition, knowledge, innovation, and particularly human capital.” 44

Human capital is the productive potential of an individual’s knowledge and actions. Potential is the operative word in this in- tentionally broad defi nition. When you are hungry, money in your pocket is good because it has the potential to buy a meal. Likewise, a present or future employee with the right combination of knowl- edge, skills, and motivation to excel represents human capital with the potential to give the organization a competitive advantage. In a 2010 poll of 449 human resource professionals, “Obtaining human capital and optimizing human capital investments” was identifi ed as the number-one challenge for companies over the next 10 years. 45 Intel, a high-tech computer-chip manufacturer, is proactive in this area because its future depends on innovative engineering. It takes years of math and science studies to make world-class engineers. Not wanting to leave the future supply of engineers to chance, Intel annually spends $100 million funding education initiatives at all levels worldwide. 46 The company encourages youngsters to study math and science and sponsors rigorous science competitions with scholarships up to $100,000 for the winners. 47 Will all of the students end up working for Intel? No. That’s not the point. The point is much bigger—namely, to build the world’s human capital.

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 capital is productive potential resulting from strong relationships, good- will, trust, and cooperative effort. 48 Again, the word potential is key. According to experts on the subject: “It’s true: the social capital that used to be a given in organizations is now rare and endangered. But the social capital we can build will allow us to capitalize on the volatile, virtual possibilities of today’s business environment.” 49 Relationships do matter. In a general survey, 77% of the women and 63% of the men rated “Good relationship with boss” extremely important. Other factors— including good equipment, resources, easy commute, and fl exible hours—received lower ratings. 50 Moreover, research indicates the favorable im- pacts positive social interactions can have on cardiovascular health and the im- mune system. 51

Building Human and Social Capital Various dimensions of human and social capital are listed in Figure 1–2. They are a preview of what lies ahead in this book, including our discussion of organizational learning in Chapter 17. For- mal organizational learning and knowledge management programs, as discussed in Chapter 12, need social capital to leverage individual human capital for the greater good. It is a straightforward formula 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?

Thanks to Intel’s deep commitment to education and building human capital, these select students got a pat on the back from President Obama.

human capital The productive potential of one’s knowledge and actions.

social capital The productive potential of strong, trusting, and cooperative relationships.

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16 Part One The World of Organizational Behavior

Back to the Chapter-Opening Case

How does Zappos.com build human and social capital?

The Managerial Context: Getting Things Done with and through Others

Like the organizations they run, managers touch our lives in many ways. Schools, hospitals, government agencies, and large and small businesses all require system- atic management. Formally defi ned, management is the process of working with and through others to achieve organizational objectives, effi ciently and ethically, in the face of constant change. For students of OB, the central feature of this defi ni- tion is working with and through others . Managers play a constantly evolving role. Today’s successful managers are no longer the I’ve-got-everything-under-control order givers of yesteryear. Rather, they need to creatively envision and actively sell bold new directions in an ethical and people-friendly manner. Effective manag- ers are team players empowered by the willing and active support of others who are driven by confl icting self-interests. Each of us has a huge stake in how well managers carry out their evolving role. A recent review of 30 years of business literature led to this conclusion about what good management involves: “Find a clear purpose. Be aware that past experience and a mass of information can inter- fere with wise decisions. Maintain a bias toward action. Be open to change. Seek feedback.” 52 A good managerial role model is Walmart’s CEO Mike Duke. His predecessor Lee Scott recently had this to say in a Fortune magazine interview:

Example. “Mike is not only a good leader but a really good manager. There’s so much said today about leadership. But I don’t think in business you can forget the fact that you don’t just have to lead, you have to manage.” . . . “Yeah, he’s a better manager than I am,” says Scott. “I think it’s his ability to deal with data, his ability to set a schedule and follow that schedule, and to get all of the things done that he needs to get done. Mike is disciplined, and I think that causes him to be able to accomplish a great deal—how he manages his time, how he manages his people, and the effectiveness of the time he spends with people.” 53

Quality of management can make a big difference for employees and custom- ers, alike.

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

What Do Managers Do? A Skills Profile Observational studies by Henry Mintzberg and others have found the typical manager’s day to be a fragmented collection of brief episodes. 54 Interruptions are commonplace, while large blocks of time for planning and refl ective 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 But what specifi c skills do effec- tive managers perform during their hectic and fragmented workdays?

Many attempts have been made over the years to paint a realistic picture of what managers do. Diverse and confusing lists of managerial functions and roles

LO.5 TO THE POINT Which of Wilson’s managerial skills are most important for 21st- century managers?

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Chapter One Organizational Behavior 17

have been suggested. Fortunately, a stream of research over the past 20 years by Clark Wilson and others has given us a practical and statistically validated profi le of managerial skills 56 (see Table 1–2). Wilson’s mana- gerial skills profi le focuses on 11 observable catego- ries of managerial behavior. This is very much in tune with today’s emphasis on managerial competency. Wilson’s unique skills-assessment technique goes be- yond the usual self-report approach with its natural bias. In addition to surveying a given manager about his or her 11 skills, the Wilson approach also asks those who report directly to the manager to answer questions about their boss’s skills. According to Wil- son and his colleagues, the result is an assessment of skill mastery, not simply skill awareness. 57 The logic behind Wilson’s approach is both simple and compel- ling. Who better to assess a manager’s skills than the people who experience those behaviors on a day-to- day basis—those who report directly to 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 in Table 1–2 constitute a goal creation/commitment/feedback/reward/ accomplishment cycle with human interaction at every turn.

According to Lee Scott, Mike Duke’s predecessor as CEO of Walmart, Duke is both a good leader and a good manager because of his discipline, ability to handle lots of data, people skills, and focus on getting timely results.

management Process of working with and through others to achieve organizational objectives, effi ciently and ethically, amid constant change.

1. Clarifi es goals and objectives for everyone involved.

2. Encourages participation, upward communication, and suggestions.

3. Plans and organizes for an orderly work fl ow.

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 and commitment.

11. Recognizes good performance with rewards and positive reinforcement.

table 1–2 Skills Exhibited by an Effective Manager

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

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18 Part One The World of Organizational Behavior

2. Managers with high skills mastery tend to have better subunit performance and employee morale than managers with low skills mastery. 58

3. Effective female and male managers do not have signifi cantly different skill profi les, 59 contrary to claims in the popular business press in recent years. 60

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 higher than their employees did). 61 This prompted the following conclusion from the researcher: “[W]hen selecting individuals for promo- tion to managerial positions, those who are arrogant, aloof, insensitive, and defensive should be avoided.” 62

21st-Century Managers Today’s workplace is indeed undergoing immense and permanent changes. 63 Organizations have been “reengineered” for greater speed, effi ciency, and fl ex- ibility. Teams are pushing aside the individual as the primary building block of organizations. 64 Command-and-control management is giving way to participa- tive management and empowerment. Ego-centered leaders are being replaced by customer-centered leaders. Employees increasingly are being viewed as internal customers. A 2008 summit of 35 executives and management scholars prompted a call for a reinvention of management. Lead researcher Gary Hamel framed the challenge this way:

Example. [Historically,] the problems were effi ciency and scale, and the solution was bureaucracy, with its hierarchical structure, cascading goals, precise role defi – nitions, and elaborate rules and procedures. Managers today face a new set of problems, products of a volatile and unfor- giving environment. Some of the most critical: How in an age of rapid change do you create organizations that are as adaptable and resilient as they are focused and effi cient? How in a world where the winds of creative destruction blow at gale force can a company innovate quickly and boldly enough to stay relevant and profi table? How in a creative economy where entrepreneurial genius is the secret to success do you inspire employees to bring the gifts of initiative, imagination, and passion to work every day? How . . . do you encourage executives to fulfi ll their responsibilities to all stakeholders? 65

All this creates a mandate for more fl exible, innovative, and responsive organi- zations and a new kind of manager in the 21st century (see Table 1–3).

Back to the Chapter-Opening Case

What evidence of a 21st-century organization, based on Table 1–3, can you fi nd in the Zappos.com case?

The Contingency Approach to Management Scholars have wrestled for many years with the problem of how best to apply the diverse and growing collection of management tools and techniques. Their answer is the contingency approach. The contingency approach calls for using manage- ment techniques in a situationally appropriate manner, instead of trying to rely on “one best way” or “one size fi ts all.”

LO.6

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The contingency approach encourages managers to view organizational behav- ior within a situational context. According to this modern perspective, evolving situations, not hard-and-fast rules, determine when and where various manage- ment techniques are appropriate. Harvard’s Clayton Christensen put it this way: “Many of the widely accepted principles of good management are only situation- ally appropriate.” 66 For example, as discussed in Chapter 16, contingency research- ers have determined that there is no single best style of leadership. Organizational behavior specialists embrace the contingency approach because it helps them re- alistically interrelate individuals, groups, and evolving circumstances inside and outside the organization. Moreover, the contingency approach sends a clear mes- sage to managers in today’s global economy: Carefully read the situation and then be fl exible enough to adapt (see Real World/Real People on page 20).

PAST MANAGERS FUTURE MANAGERS

Primary role Order giver, privileged elite, manipulator, controller

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

Learning and knowledge Periodic learning, narrow specialist

Continuous life-long learning, generalist with multiple specialties

Compensation criteria Time, effort, rank Skills, results

Cultural orientation Monocultural, monolingual Multicultural, multilingual

Primary source of infl uence Formal authority

Knowledge (technical and interpersonal)

View of people Potential problem Primary resource; human capital

Primary communication pattern Vertical Multidirectional

Decision-making style Limited input for individual decisions Broad-based input for joint decisions

Ethical considerations Afterthought Forethought

Nature of interpersonal relationships Competitive (win–lose) Cooperative (win–win)

Handling of power and key information

Hoard and restrict access

Share and broaden access for greater transparency

Approach to change Resist Facilitate

table 1–3 Evolution of the 21st-Century Manager

contingency approach Using management tools and techniques in a situationally appropriate manner; avoiding the one-best-way mentality.

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20 Part One The World of Organizational Behavior

The Ethics Challenge Thanks to highly publicized criminal acts of now-jailed executives from the likes of Enron, Tyco, and WorldCom, 67 corporate offi cers in the United States became subject to high accountability standards and harsh penalties under the Sarbanes- Oxley Act of 2002. 68 Sadly, instead of improving, business ethics continued to hit new lows, as symbolized by Ponzi schemer Bernard Madoff’s 150-year prison sen- tence in 2009 and Goldman Sachs’s record $550 million fi ne to settle fraud charges in 2010. 69 The general public and elected offi cials (who have their own criminal hall of shame) continue to call for greater attention to ethical conduct. 70

Clearly, everyone needs to join in the effort to stem this tide of unethical con- duct. There are a variety of individual and organizational factors that contribute to unethical behavior. OB is an excellent vantage point for better understand- ing and improving workplace ethics. If OB can provide insights about managing human work behavior, then it can teach us something about avoiding misbehavior .

Ethics involves the study of moral issues and choices. It is concerned with right versus wrong, good versus bad, and the many shades of gray in supposedly black- and-white issues. Moral implications spring from virtually every decision, both on and off the job. Managers are challenged to have more imagination and the cour- age to do the right thing to make the world a better place.

To enhance our understanding of ethics within an OB context, we will discuss (1) a corporate social responsibility model, (2) the general erosion of morality, (3) seven moral principles for managers, (4) how to improve an organization’s ethical climate, and (5) a personal call to action.

A Model of Global Corporate Social Responsibility and Ethics Corporate social responsibility (CSR) is defi ned as “the notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law or union contract.” 71 CSR challenges businesses to go above and beyond just making a profi t to serve the interests and needs of

LO.7

[L]ast year when [American Express] gave its global cus- tomer service division a makeover, it decided to focus on making life better for its 26,000 call-center employees. The theory: Happier employees mean happier customers. “We’ve learned the importance of the attitude of the em- ployee,” says Jim Bush, EVP of world service. AmEx started by asking customer service employees what they wanted to see—and then delivered better pay, fl exible schedules, and more career development. It also switched from a directive to keep calls short and transaction- oriented to engaging customers in longer conversations. Collectively, the moves have boosted service margins by 10%. “Great service starts with the people who deliver it,” says [CEO Ken] Chenault. “We want American Express to be the company people recommend to their friends.”

Based on Table 1–3, what evidence of 21st- century management can you find here?

SOURCE: Excerpted from C Tkaczyk, “American Express,” Fortune , August 16, 2010, p 14.

real WORLD // real PEOPLE Will Happy Employees Mean Happy Customers for American Express?

TO THE POINT How can an understanding of Carroll’s social responsibility pyramid and the seven moral principles lead to more ethical conduct in the workplace?

American Express CEO Kenneth I Chenault.

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Chapter One Organizational Behavior 21

“stakeholders,” including past and present employees, customers, suppliers, and countries and communities where facilities are located. 72 A good deal of contro- versy surrounds the drive for greater CSR because classical economic theory says businesses are responsible for producing goods and services to make profi ts, not solving the world’s social, political, and environmental ills. 73 What is your opinion?

University of Georgia business ethics scholar Archie B Carroll views CSR in broad terms. So broad, in fact, that he created a model of CSR/business ethics with the global economy and multinational corporations in mind (see Figure 1–3). This model is very timely because it effectively triangulates three major trends: (1) economic globalization, (2) expanding CSR expectations, and (3) the call for im- proved business ethics. Carroll’s global CSR pyramid, from the bottom up, advises organizations in the global economy to

• Make a profi t consistent with expectations for international businesses. • Obey the law of host countries as well as international law. • Be ethical in its practices, taking host-country and global standards into

consideration. • Be a good corporate citizen, especially as defi ned by the host country’s

expectations. 74

fi gure 1–3 Carroll’s Global Corporate Social Responsibility Pyramid

Be a good global corporate citizen

Do what is desired by global stakeholders

Do what is expected by global stakeholders

Do what is required by global stakeholders

Do what is required by global capitalism

Be ethical

Obey the law

Be profitable

Philanthropic Responsibility

Ethical Responsibility

Legal Responsibility

Economic Responsibility

SOURCE: A B Carroll, Academy of Management Executive: The Thinking Manager’s Source. Copyright © 2004 by The Academy of Management. Reproduced by permission of The Academy of Management via Copyright Clearance Center.

ethics Study of moral issues and choices.

corporate social responsibility Corporations are expected to go above and beyond following the law and making a profi t.

Go to www.mcgrawhillconnect.com for a video case on Patagonia and their philosophy concerning corporate social responsibility.

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22 Part One The World of Organizational Behavior

In keeping with the pyramid idea, Carroll emphasizes that each level needs to be solid if the structure is to stand. A pick-and-choose approach to CSR is inappropriate. The top level of the pyramid, according to Carroll, refl ects “global society’s expectations that business will engage in social activities that are not man- dated by law nor generally expected of business in an ethical sense.” 75 The spirit of Carroll’s global corporate social responsibility pyramid is evident in Nike’s on- going quest to shake its sweatshop image:

Example. Progress has been slow in coming to Nike’s global supply chain, which employs nearly 800,000 workers in 52 countries. Still, Nike . . . has made strides since it embraced corporate responsibility. What started as a massive PR shield has evolved into a broader mandate for the way it makes and sells products. Nike has been particularly inventive at weaving environmental awareness into its de- sign process, rating each sneaker according to a sustainability index. On labor, the company admits that its initial efforts—setting a code of conduct and monitoring compliance—haven’t ended abuses across the hundreds of factories that produce its goods. But the lessons from the 1990s—to own up to problems, then fi nd com- panywide solutions—are helping the world’s biggest shoemaker  .  .  . with labor issues. “I’m proud of what we’ve accomplished, but we’re still not where we need to be,” says Nike’s current CEO, Mark Parker. 76

Our OB in Action Case Study on Whole Foods at the end of this chapter is a good CSR example. With this global CSR perspective in mind, we now narrow the focus to individual moral behavior.

Back to the Chapter-Opening Case

Where does Zappos.com belong on Carroll’s Corporate Social Responsibility Pyramid in Figure 1–3? Explain.

An Erosion of Morality? David Callahan, in his book The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead , paints this disturbing picture of modern society:

Example. [T]he character of Americans has changed. Those values associated with the market hold sway in their most caricatured form: individualism and self- reliance have morphed into selfi shness and self-absorption; competitiveness has become social Darwinism; desire for the good life has turned into material- ism; aspiration has become envy. There is a growing gap between the life that many Americans want and the life they can afford—a problem that bedevils even those who would seem to have everything. Other values in our culture have been sidelined; belief in community, social responsibility, compassion for the less able or less fortunate. 77

Bolstering this negative view is a 2010 survey in which 72% of Americans polled said corruption had increased in the United States during the past three years. 78 Does this portrayal of a “cheating culture” have merit and, if so, to what extent? Let us examine the OB research evidence for relevant insights.

Go to www.mcgrawhillconnect.com for an interactive comprehension case exercise to learn about ethics.

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Taking Local Norms and Conduct into Consideration National culture, as discussed in Chapter 4, affects how people think and act about every- thing, including ethical issues. This reality was supported in a multination study (including the United States, Great Britain, France, Germany, Spain, Switzerland, India, China, and Australia) of management ethics. Managers from each country were asked to judge the ethicality of 12 questionable behaviors, including such things as giving and accepting gifts, passing blame, sharing confi dential informa- tion, and concealing errors. Results revealed signifi cant differences across the 10 nations in the study. That is, managers in some countries approved of practices that were frowned upon in other countries. 79 Consequently, care needs to be taken when extrapolating Callahan’s characterization of American morality to other cultures. Each culture requires its own ethical analysis, taking local norms into consideration.

Ethical Lapses in the Workplace A nationwide survey of 581 human resource professionals revealed that 62% of the respondents occasionally observed unethical behavior at their companies. 80 Unethical behavior occurs at all organi- zational levels, although recent research indicates that senior executives tend to have signifi cantly more positive perceptions of ethics in their organizations than do lower-level employees. 81 Perhaps that is because lower-level employees regularly witness common ethical lapses such as lying about being sick, fudging a report, bullying and sexual harassment, personal use of company equipment, and stealing company property or funds. Executives are not immune to being victims of uneth- ical conduct, however. For example, a survey of job applicants for executive posi- tions indicated that 64% had been misinformed about the fi nancial condition of potential employers, and 58% of these individuals were negatively affected by this misinformation. 82 It is very likely that some of those affected individuals moved their families and left their friends only to discover the promise of a great job in a fi nancially stable organization was a lie. Job applicants, for their part, also have ethical lapses. An analysis of 2.6 million background checks by ADP Screening and Selection Services, revealed that “44% of applicants lied about their work his- tories, 41% lied about their education, and 23% falsifi ed credentials or licenses.” 83

Experts estimate that US companies lost about $994 billion to fraud in 2008, much of it at the hands of insiders. 84 On a global scale, the World Bank says, “brib- ery has become a $1 trillion industry.” 85

Intense Pressure for Results Starts Early Lower-level man- agers generally want to “look good” for their bosses. In support of this conclusion, many studies have found a tendency among middle- and lower-level managers to act unethically in the face of perceived pressure for results. Further, this tendency is particularly pronounced when in- dividuals are signifi cantly rewarded for accomplishing their goals. 86 By fostering a pressure-cooker atmosphere for results, managers can unwit- tingly set the stage for unethical shortcuts by employees who seek to please the boss, protect their jobs, and be loyal to the company. 87

Unfortunately, the seeds of this problem are planted early in life. A survey of 787 youngsters ages 13 to 18 found “that 44% of teens feel they’re under strong pressure to succeed in school, no matter the cost. Of those, 81% believe the pressure will be the same or worse in the work- place.” 88 Sixty-nine percent of the students admitted to lying in the past year (with 27% confessing they even lied on the survey!). 89 Anonymous surveys by the Josephson Institute of Ethics of 43,321 students ages 15 to 18 from private and public high schools across the United States found 60% admittedly had cheated on a test in 2010 “and 34% did so twice or more. Students at non-religious private schools cited the lowest percentage (33%), while 56% at religious schools said they cheated.” 90

Some believe intense pressure for results by BP managers ultimately was responsible for the 11 deaths and environmental disaster when Transocean’s Deepwater Horizon drilling rig exploded and sank into the Gulf of Mexico in 2010.

Go to www.mcgrawhillconnect.com for a self-assessment to determine your ethical decision-making skills.

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24 Part One The World of Organizational Behavior

In summary, Callahan’s earlier characterization of America’s cheating cul- ture is an appropriate wake-up call. The challenge to improve is immense because unethical behavior is pervasive.

General Moral Principles Management consultant and writer Kent Hodgson has helpfully taken manag- ers a step closer to ethical decisions by identifying seven general moral principles (see Table 1–4). Hodgson calls them “the magnifi cent seven” to emphasize their timeless and worldwide relevance. Notions of both justice and care are clearly evident in the magnifi cent seven, which are detailed and, hence, more practical. Importantly, according to Hodgson, there are no absolute ethical answers for decision makers. The goal for managers should be to rely on moral principles so their decisions are principled, appropriate, and defensible. 91 (See Real World/ Real People.)

How to Improve the Organization’s Ethical Climate Improving workplace ethics is not just a nice thing to do; it also can have a positive impact on the bottom line. Studies in the United States and the United Kingdom demonstrated that corporate commitment to ethics can be profi table. Evidence

LO.8

1. Dignity of human life: The lives of people are to be respected. Human beings, by the fact of their existence, have value and dignity. We may not act in ways that directly intend to harm or kill an innocent person. Human beings have a right to live; we have an obligation to respect 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. We should 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 should not use others as mere “things” or only as means to an end. Each person has an equal right to 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 known as integrity, truth telling, and honor. One should speak and act so as to refl ect the reality of the situation. Speaking and acting should mirror the way things really are. There are times when others 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 fi delity, 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 to the necessities of life— especially those in deep need and the helpless. Justice includes equal, impartial, unbiased treatment. Fairness tolerates diversity and accepts differences in people and their ideas.

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

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

table 1–4 The Magnifi cent Seven: General Moral Principles for Managers

SOURCE: From Kent Hodgson, A Rock and a Hard Place: How to Make Ethical Business Decisions When the Choices Are Tough © 1992. Reprinted with permission of the author.

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suggested that profi tability is enhanced by a reputation for honesty and corporate citizenship. 92 Ethics also can impact the quality of people who apply to work in an organization. An online survey of 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.” 93

A team of management researchers recommended the following actions for improving on-the-job ethics. 94

• Behave ethically yourself. Managers are potent role models whose habits and actual behavior send clear signals about the importance of ethical conduct. Ethical behavior is a top-to-bottom proposition and executives are challenged “to simultaneously maximize the so-called triple bottom line, or ‘People, Planet, Profi t.’” 95

• Screen potential employees. Surprisingly, employers are generally lax when it comes to checking references, credentials, transcripts, and other informa- tion on applicant résumés. More diligent action in this area can screen out those given to fraud and misrepresentation. Integrity testing is fairly valid but is no panacea. 96

• Develop a meaningful code of ethics. Codes of ethics can have a positive impact if they satisfy these four criteria: 1. They are distributed to every employee. 2. They are fi rmly supported by top management. 3. They refer to specifi c practices and ethical dilemmas likely to be encoun-

tered by target employees (e.g., salespersons paying kickbacks, purchasing agents receiving payoffs, laboratory scientists doctoring data, or accoun- tants “cooking the books”).

4. They are evenly enforced with rewards for compliance and strict penalties for noncompliance. 97

• Provide ethics training. Employees can be trained to identify and deal with ethical issues during orientation and through seminar, video, and Internet training sessions. 98

• Reinforce ethical behavior. Behavior that is reinforced tends to be repeated, whereas behavior that is not reinforced tends to disappear. Ethical conduct too often is ignored or even punished while unethical behavior is rewarded.

Bill Gates and Warren Buffett announced . . . [in 2010] that 40 of America’s richest people have agreed to sign a “Giving Pledge” to donate at least half their wealth to charity. With a collective net worth said to total $230 billion, that promise translates to at least $115 billion. . . .

Successful entrepreneurs-turned-philanthropists typi- cally say they feel a responsibility to “give back” to soci- ety. But “giving back” implies they have taken something. What, exactly, have they taken? Yes, they have amassed great sums of wealth. But that wealth is the reward they

have earned for investing their time and talent in creating products and services that others value. They haven’t taken from society, but rather enriched us in ways that were previously unimaginable.

What do you think about the issue of giving back? Explain the ethics and general moral prin- ciples of your position.

SOURCE: Excerpted from K O Dennis, “Gates and Buffett Take the Pledge,” The Wall Street Journal, August 20, 2010, p A15.

real WORLD // real PEOPLE: ethics Do Billionaire Businesspeople Have an Obligation to “Give Back” to Society?

Go to www.mcgrawhillconnect.com for an interactive exercise to test your knowledge on the model of global corporate social responsibility.

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26 Part One The World of Organizational Behavior

• Create positions, units, and other structural mechanisms to deal with ethics. Ethics needs to be an everyday affair, not a one-time announcement of a new ethical code that gets fi led away and forgotten. A growing number of large companies in the United States have chief ethics offi cers who report directly to the CEO, thus making ethical conduct and accountability prior- ity issues.

• Create a climate in which whistle-blowing becomes unnecessary. Whistle- blowing occurs when an employee reports a perceived unethical and/or illegal activity to a third party such as government agencies, news media, or public-interest groups. Enron’s Sherron Watkins was a highly publicized whistle-blower. 99 Organizations can reduce the need for whistle-blowing by encouraging free and open expression of dissenting viewpoints and giving employees a voice through fair grievance procedures and/or anonymous ethics hot lines.

A Personal Call to Action In the fi nal analysis, ethics comes down to individual perception and motivation. Organizational climate, role models, structure, training, and rewards all can point employees in the right direction. But individuals fi rst must be morally attentive, meaning they faithfully consider the ethical implications of their actions and circumstances. 100

Second, they must want to do the right thing and have the courage to act. Bill George, the respected former CEO of Medtronic, the maker of life-saving devices such as heart pacemakers, gave us this call to action: “Each of us needs to determine . . . where our ethical boundaries are and, if asked to violate (them), refuse. . . . If this means refusing a direct order, we must be prepared to resign.” 101 Rising to this challenge requires strong personal values (more about values in Chapter 6) and the courage to adhere to them during adversity.

Learning about OB: Research and a Road Map OB is a broad and growing fi eld. We have a lot of ground to cover. To make the trip as instructive and effi cient as possible, we use a theory→research→practice strategy. For virtually all major topics in this book, we begin by presenting the underlying theoretical framework (often with graphical models showing how key variables are related) and defi ning key terms. Next, we tap the latest research fi nd- ings for valuable insights. Finally, we round out the discussion with illustrative practical examples and, when applicable, how-to-do-it advice.

Five Sources of OB Research Insights OB gains its credibility as an academic discipline by being research driven. Scientifi c rigor pushes aside speculation, prejudice, and untested assumptions about workplace behavior. We systematically cite “hard” evidence from fi ve dif- ferent categories. Worthwhile evidence was obtained by drawing on the following priority of research methodologies:

• Meta-analyses . A meta-analysis is a statistical pooling technique that per- mits behavioral scientists to draw general conclusions about certain vari- ables from many different studies. 102 It typically encompasses a vast number of subjects, often reaching the thousands. Meta-analyses are instructive be- cause they focus on general patterns of research evidence, not fragmented bits and pieces or isolated studies. 103

LO.9

TO THE POINT Which of the fi ve research methodologies is likely to provide the best insights about OB?

Go to www.mcgrawhillconnect.com for an interactive exercise to test your knowledge on improving the ethical climate in your organization.

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Chapter One Organizational Behavior 27

• Field studies. In OB, a fi eld study probes individual or group processes in an organizational setting. Because fi eld studies involve real-life situ- ations, their results often have immediate and practical relevance for managers.

• Laboratory studies. In a laboratory study, variables are manipulated and measured in contrived situations. College students are commonly used as subjects. The highly controlled nature of laboratory studies enhances re- search precision. But generalizing the results to organizational management requires caution.

• Sample surveys. In a sample survey, samples of people from specifi ed popu- lations respond to questionnaires. The researchers then draw conclusions about the relevant population. Generalizability of the results depends on the quality of the sampling and questioning techniques.

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

A Topical Model for Understanding and Managing OB Figure 1–4 is a topical road map for our journey through this book. Our des- tination is organizational effectiveness through continuous improvement. Four different criteria for determining whether or not an organization is effective are discussed in Chapter 17. The study of OB can be a wandering and pointless trip if we overlook the need to translate OB lessons into an effective and effi cient or- ganized endeavor.

At the far left side of our topical road map are managers and team leaders, those who are responsible for accomplishing organizational results with and through others. The three circles at the center of our road map correspond to Parts 2, 3, and 4 of this text. Logically, the fl ow of topical coverage in this book (following introductory Part 1) goes from individuals, to group processes, to or- ganizational processes. Around the core of our topical road map in Figure 1–4 is the organization. Accordingly, we end our journey with organization-related material in Part 4. Organizational structure and design are covered there in Chapter 17 to establish and develop the organizational context of organiza- tional behavior. Rounding out our organizational context is a discussion of organizational change in Chapter 18. Chapters 3 and 4 provide a cultural con- text for OB.

The dotted line represents a permeable boundary between the organization and its environment. Energy and infl uence fl ow both ways across this permeable boundary. Truly, no organization is an island in today’s highly interactive and in- terdependent world. Relative to the external environment, international cultures

whistle-blowing Reporting unethical/illegal acts to outside third parties.

morally attentive Faithfully considering the ethical implications of one’s actions.

meta-analysis Pools the results of many studies through statistical procedure.

fi eld study Examination of vari- ables in real-life settings.

laboratory study Manipulation and measurement of variables in con- trived situations.

sample survey Questionnaire re- sponses from a sample of people.

case study In-depth study of a single person, group, or organization.

Go to www.mcgrawhillconnect.com for an interactive exercise to test your knowledge on the sources of organizational behavior research.

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28 Part One The World of Organizational Behavior

Summary of Key Concepts 1. Defi ne the term organizational behavior, and contrast

McGregor’s Theory X and Theory Y assumptions about employees . Organizational behavior (OB) is an interdisci- plinary fi eld dedicated to better understanding and man- aging people at work. It is both research and application oriented. Theory X employees, according to traditional thinking, dislike work, require close supervision, and are primarily interested in security. According to the modern Theory Y view, employees are capable of self-direction, of seeking responsibility, and of being creative.

2. Identify the four principles of total quality management (TQM). (a) Do it right the fi rst time to eliminate costly rework. (b) Listen to and learn from customers and em- ployees. (c) Make continuous improvement an everyday matter. (d ) Build teamwork, trust, and mutual respect.

3. Defi ne the term e-business, and describe the Net Gen- eration. E-business involves using the Internet to more effectively and effi ciently manage every aspect of a busi- ness, including virtual teams. Tapscott describes the Net Generation—the 81 million Americans born between the start of 1977 and the end of 1997 who grew up with the Internet—in terms of eight norms: ( a ) value free- dom, ( b )  customize everything, ( c ) be skeptical, ( d ) value integrity, ( e ) abide by commitments, ( f ) be a great collaborator, ( g ) thrive on speed, ( h ) love to innovate.

4. Contrast human and social capital, and explain why we need to build both . The fi rst involves individual characteristics; the second involves social relationships. Human capital is the productive potential of an individual’s knowledge and actions. Dimensions include such things as intelligence,

fi gure 1–4 A Topical Model for What Lies Ahead

External Environment (Cultural Context)

Organization (Structure, Culture, Change)ructure, Culture, Change

Understanding and managing

individual behavior

Understanding and managing

group and social processes

Understanding and managing organizational processes and

problems

Managers and team leaders responsible

for achieving organizational

results with and through others

Organizational effectiveness

through continuous

improvement

are explored in Chapter 4. Organization–environment contingencies are examined in Chapter 17.

Chapter 2 examines the OB implications of signifi cant demographic and social trends. These discussions provide a realistic context for studying and managing people at work.

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

28 Part One The World of Organizational Behavior

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visions, skills, self-esteem, creativity, motivation, eth- ics, and emotional maturity. Social capital is productive potential resulting from strong relationships, goodwill, trust, and cooperative effort. Dimensions include such things as shared visions and goals, trust, mutual respect, friendships, empowerment, teamwork, win–win negotia- tions, and volunteering. Social capital is necessary to tap individual human capital for the good of the organization through knowledge sharing and networking.

5. Defi ne the term management, and identify at least fi ve of the eleven managerial skills in Wilson’s profi le of effective managers. Management is the process of working with and through others to achieve organizational objectives in an effi cient and ethical manner. According to the Wilson skills profi le, an effective manager ( a ) clarifi es goals and objectives, ( b ) encourages participation, ( c ) plans and organizes, ( d ) has technical and administrative expertise, ( e ) facilitates work through team building and coach- ing, ( f ) provides feedback, ( g ) keeps things moving, ( h ) controls details, ( i ) applies reasonable pressure for goal accomplishment, ( j ) empowers and delegates, and ( k )  recognizes and rewards good performance.

6. Characterize 21st-century managers. They will be team players who will get things done cooperatively by rely- ing on joint decision making, their knowledge instead of formal authority, and their multicultural skills. They will engage in life-long learning and be compensated on the basis of their skills and results. They will facilitate rather than resist change, share rather than hoard power and key information, and be multidirectional communicators. Ethics will be a forethought instead of an afterthought. They will be generalists with multiple specialties.

7. Describe Carroll’s global corporate social responsibility pyramid, and discuss the problem of moral erosion. From

bottom to top, the four levels of corporate responsibility in Carroll’s pyramid are: economic (make a profi t); legal (obey the law); ethical (be ethical in its practices); and philanthropic (be a good corporate citizen). Progress needs to be made on all levels. Callahan’s claim that America has developed a “cheating culture” is supported by unethi- cal conduct at all organizational levels. An unintended but serious consequence of excessive pressure for results, beginning in school and carrying over to the workplace, is expedient unethical behavior. Moral erosion is evident in high school and workplace surveys about misconduct.

8. Identify four of the seven general ethical principles, and explain how to improve an organization’s ethical climate. The “magnifi cent seven” moral principles are ( a ) dignity of human life, ( b ) autonomy, ( c ) honesty, ( d ) loyalty, ( e )  fairness, ( f ) humaneness (by doing good and avoiding evil), and ( g ) the common good (accomplishing the great- est good for the greatest number of people). An organiza- tion’s ethical climate can be improved by managers being good role models, carefully screening job applicants, creat- ing and fi rmly enforcing a code of ethics mentioning spe- cifi c practices, providing ethics training, rewarding ethical behavior, creating ethics-related positions and structures, and reducing the need for whistle-blowing (reporting unethical conduct to outside third parties) through open and honest debate.

9. Describe the sources of organizational behavior research evidence. Five sources of OB research evidence are meta-analyses (statistically pooled evidence from several studies), fi eld studies (evidence from real-life situations), laboratory studies (evidence from contrived situations), sample surveys (questionnaire data), and case studies (observation of a single person, group, or organization).

Key Terms Organization, 5

Organizational behavior, 6

Theory Y, 9

Total quality management, 11

E-business, 12

Human capital, 15

Social capital, 15

Management, 16

Contingency approach, 18

Ethics, 20

Corporate social responsibility, 20

Whistle-blowing, 26

Morally attentive, 26

Meta-analysis, 26

Field study, 27

Laboratory study, 27

Sample survey, 27

Case study, 27

John Mackey, Cofounder and Co-CEO of Whole Foods Market, Believes in “Conscious Capitalism” 104

What is conscious capitalism?

First, you have to understand the basic principles that help capitalism fl ourish. One is property rights. You need the ability to trade your property, and to trade it

to pretty much whomever you want. Another is the rule of law—laws and regulations that are well understood so that you can factor them into your business decisions. The rule of law has to be applied equally to everyone. . . . You also need to have conscious businesses—that is,

OB in Action Case Study

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30 Part One The World of Organizational Behavior

businesses that become conscious of their higher pur- pose, which is not just about maximizing profi ts and shareholder value.

Second, you have to recognize the stakeholder model: Customers, employees, investors, suppliers, larger com- munities, and the environment are all interdependent. You operate the business in such a way that it’s not a zero-sum game.

Third, you need what we call conscious leadership. You could also call it servant leadership. Leaders identify their own fl ourishing with the fl ourishing of the organi- zation. They’re trying to serve the organization and its purpose.

Fourth, you have to create a conscious culture—a cul- ture that allows the organization to fulfi ll its higher pur- pose, implements the stakeholder model, and enables con- scious leadership to fl ourish.

So, what are the core principles of Whole Foods, and where do they come from?

I think business enterprises are like any other com- munities. They can aspire to the highest values that have inspired humans throughout time. You can use different value models, but I like Plato’s the good, the true, and the beautiful. Add the heroic to that—meaning changing and improving the world and standing up for what you believe is true and right and good. I think Whole Foods’ highest purpose is a heroic one: to try to change and improve our world. That is what animates me personally. That is what animates the company. I resisted that purpose for a long time, by the way. I actually thought we were in some vari- ant of service—that it was really about fulfi lling the good. The team members consistently told me I was wrong, that we had a different purpose. It was this more heroic purpose.

In terms of the age-old debate about whether companies exist for the shareholders or for something else, is there one group? Is it customers? Is it employees? Or is it this purpose?

That gets back to the second principle of conscious capitalism—the stakeholder model. I think it’s kind of deep in human nature to think in terms of the zero sum. If one stakeholder is winning, someone else must be losing. It comes from sports, where there is one winner and lots of losers, and this idea of a fi xed pie, where if someone is get- ting a bigger piece, someone else has to be getting a smaller piece, and what’s needed for social justice is to make sure people get equal pieces. But a conscious business recog- nizes that you can have an expanding pie, and potentially everyone can get a larger piece.

I’ll give you a simple example: Management’s job at Whole Foods is to make sure that we hire good people, that they are well trained, and that they fl ourish in the workplace, because we found that when people are really happy in their jobs, they provide much higher degrees of service to the customers. Happy team members result in happy customers. Happy customers do more business with you. They become advocates for your enterprise, which results in happy investors. That is a win, win, win, win strategy. You can expand it to include your suppliers and the communities where you do business, which are tied in to this prosperity circle. A metaphor I like is the spiral, which tends to move upward but doesn’t move in a straight line.

Questions for Discussion 1. What role, if any, does McGregor’s Theory Y play at

Whole Foods? Explain. 2. How does Whole Foods build human and social

capital? 3. How does this case bring the profi le of the 21st- century

manager (Table 1–3) to life? Explain. 4. Where would you locate Whole Foods on Carroll’s

global corporate social responsibility pyramid in Figure 1–3? Explain.

5. Which of the seven moral principles in Table 1–4 appear to be in force at Whole Foods? Explain.

6. What appeals to you (or does not appeal to you) about working at Whole Foods? Explain.

“There are lots of problems with seniority-based layoffs. The L.A. Times looked at which teachers were recently laid off in Los Angeles and bumped that list up against the teacher-performance data they have there. Many who were laid off were in the top quartile. That’s just insane! The union president says this is the only way to do it that’s fair. But it’s in direct contradiction to what’s right for kids. If they had done it by quality, not seniority, it would have been more cost effective and better for stability; you would have laid off fewer teachers. Those are the kinds of policies we’re going after—and they exist everywhere.” 105

As a parent, school board member, or school administrator, what position would you take on this ethics-laden issue? 1. By virtue of their many years of service, senior teach-

ers have earned the right to be protected from a layoff. (What is your ethical reasoning for this view?)

2. Like students, teachers should be graded and rewarded in terms of documented performance. (What general

School Reform Advocate Michelle Rhee Wants to Put Students First

Legal/Ethical Challenge

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Chapter One Organizational Behavior 31

For study material and exercises that apply to this chapter, visit our website, www.mhhe.com/kreitner10e

Web Resources

criteria should be applied to determine who gets laid off ? What is your ethical argument?)

3. Younger, lower-paid teachers are in a better position to survive a layoff than their longer-tenured colleagues. (What is your ethical argument?)

4. The only truly fair approach is to have a lottery draw- ing to determine who gets laid off. (What are the ethi- cal arguments for and against this approach?)

5. Invent other interpretations or options. Discuss.

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Learning Objectives When you fi nish studying the material in this chapter, you should be able to:

LO.1 Defi ne diversity and review the four layers of diversity.

LO.2 Explain the difference between affi rmative action and managing diversity.

LO.3 Explain why Alice Eagly and Linda Carli believe that a woman’s career is best viewed as traveling through a labyrinth.

LO.4 Review the demographic trends pertaining to racial groups, educational mismatches, and an aging workforce.

LO.5 Highlight the managerial implications of increasing diversity in the workforce.

LO.6 Describe the positive and negative effects of diversity by using social categorization theory and information/decision-making theory.

LO.7 Identify the barriers and challenges to managing diversity.

LO.8 Discuss the organizational practices used to effectively manage diversity as identifi ed by R Roosevelt Thomas Jr.

Managing Diversity: Releasing Every Employee’s Potential

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Michelle Barfi eld was prepared for prisoners to harass her when she started her new job as an Arizona Depart- ment of Corrections offi cer at the maximum-security unit in Florence two years ago.

What Barfi eld did not count on was receiving worse treatment from her co-workers.

A federal jury found the treatment Barfi eld endured from a group of male co-workers, including vulgar com- ments about sexual acts and references to her interracial marriage, was unacceptable. The jury awarded her more than $600,000 in U.S. District Court last week. . . .

Corrections Director Charles Ryan said the agency is taking harassment claims seriously and has imple- mented an additional training program for supervisors since Barfi eld’s allegations came to light. . . .

Barfi eld said her allegations of harassment were ig- nored or minimized by supervisors at the prison in Flor- ence, so she remains skeptical about the agency’s commitment to dismantling the corrections offi cers’ “boys clubs” that she said dominate some units around the state. . . .

Barfi eld claims the harassment began almost as soon as she started working in Florence’s Central Unit in No- vember 2008, with her co-workers making comments about her looks, her body, and her motivations for work- ing in a prison.

“They said, ‘No girl wants to work here unless they want to (have sex with) an inmate or another offi cer,’ Barfi eld recalled in a recent interview.

At fi rst, Barfi eld said, she told the other corrections offi cers not to speak to her that way. Then she tried ignoring it.

Her fellow offi cers told Barfi eld that their behavior— including handcuffi ng Barfi eld to an inmate’s cell and tear- ing her rotator cuff in an unsolicited wrestling match— were part of an initiation into the unit.

As time went on without her co-workers changing their behavior, Barfi eld brought the situation to the atten- tion of a commander.

The commander, Sgt. David Wall, initially encouraged her to not fi le a report “so it wouldn’t become a (human resources) issue,” Barfi eld said.

Wall was later reprimanded by a deputy warden in Florence. . . .

One offi cer was fi red, but the situation hardly im- proved. Other offi cers responded by not communicating with her, a danger in that work environment.

Word also got out in the prison yard of Barfi eld’s inter- racial marriage. Soon, suspected members of a White supremacist prison gang began making remarks about her marriage. 1

Why Did Management Ignore Complaints of Sexual Harassment?

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34 Part One The World of Organizational Behavior

The chapter-opening vignette illustrates sexual harassment. Sexual harassment refl ects unwanted sexual attention that creates an adverse or hostile work environ- ment and it is more widespread than you might think. A recent poll of 12,000 peo- ple in 24 countries showed that 10% were sexually or physically harassed. 2 Sexual harassment is a violation of Equal Employment Opportunity laws in the United States, and it negatively affects victims like Michelle Barfi eld in multiple ways.

Effectively managing diversity is important because it affects employees’ satis- faction, productivity, turnover, and safety, but it also makes good business sense. Unfortunately, some organizations like the Arizona Department of Corrections and Walmart are missing the mark when it comes to managing diversity, and the result can be costly lawsuits. Michelle Barfi eld received more than $600,000 from the Arizona Department of Corrections, and Walmart settled a class-action discrimination case for $12 million in 2010. Walmart is currently facing another class-action lawsuit that involves 1.5 million female employees who claim they were paid less than men for doing similar work and that they were given fewer promotional opportunities than men. The US Supreme Court is planning to hear the case. 3

Managing diversity is a sensitive, potentially volatile, and sometimes uncom- fortable issue. Yet managers are required to deal with it in the name of organi- zational survival. Accordingly, the purpose of this chapter is to help you get a better understanding of this important context for organizational behavior. We begin by defi ning diversity. Next, we build the business case for diversity and then discuss the barriers and challenges associated with managing diversity. The chap- ter concludes by describing the organizational practices used to manage diversity effectively.

Defi ning Diversity Diversity represents the multitude of individual differences and similarities that exist among people. It is not an issue of age, race, or gender. It is not an issue of being heterosexual, gay, or lesbian or of being Catholic, Jewish, Protestant, Mus- lim, or Buddhist. Diversity also does not pit white males against all other groups of people. Diversity pertains to the host of individual differences that make all of us unique and different from others.

This section begins our journey into managing diversity by fi rst reviewing the key dimensions of diversity. Because many people associate diversity with affi rma- tive action, this section compares affi rmative action with managing diversity. They are not the same.

Layers of Diversity Like seashells on a beach, people come in a variety of shapes, sizes, and col- ors. This variety represents the essence of diversity. Lee Gardenswartz and Anita Rowe, a team of diversity experts, identifi ed four layers of diversity to help distin- guish the important ways in which people differ (see Figure 2–1 ). Taken together, these layers defi ne your personal identity and infl uence how each of us sees the world.

Figure 2–1 shows that personality is at the center of the diversity wheel. Per- sonality is at the center because it represents a stable set of characteristics that is responsible for a person’s identity. The dimensions of personality are discussed later in Chapter 5. The next layer of diversity consists of a set of internal dimen- sions that are referred to as surface-level dimensions of diversity. These dimen- sions, for the most part, are not within our control, but they strongly infl uence our attitudes and expectations and assumptions about others, which, in turn, infl uence our behavior. Take the encounter experienced by an African American woman in middle management while vacationing at a resort:

LO.1 TO THE POINT Why is it important for managers to focus on managing diversity?

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Chapter Two Managing Diversity: Releasing Every Employee’s Potential 35

Example. While I was sitting by the pool, “a large 50-ish white male approached me and demanded that I get him extra towels. I said, ‘Excuse me?’ He then said, ‘Oh, you don’t work here,’ with no shred of embarrassment or apology in his voice.” 4

Stereotypes regarding one or more of the surface-level dimensions of diversity most likely infl uenced this man’s behavior toward the woman.

Figure 2–1 reveals that the next layer of diversity is composed of external infl u- ences, which are referred to as secondary dimensions of diversity. They represent individual differences that we have a greater ability to infl uence or control. Exam- ples include where you grew up and live today, your religious affi liation, whether

*Internal dimensions and external dimensions are adapted from Marilyn Loden and Judy B Rosener, Workforce America! (Homewood, IL: Business One Irwin, 1991).

SOURCE: L Gardenswartz and A Rowe, Diverse Teams at Work: Capitalizing on the Power of Diversity (New York: McGraw-Hill, 1994), p 33. © 1994.

fi gure 2–1 The Four Layers of Diversity

Functional level/ classification

Work content/

field

Management status

Personal habitsParental

status

Recreational habits

Union affiliation

GenderRace

Appearance

Division/ department/

unit/ group

Work experience

Sexual orientationEthnicity

Religion

Work location

Seniority

Physical ability

Educational background

Income Marital status

Geographic location

Age

Orga nizational dimensions

Extern al dimensions*

Inte rnal dimensions*

Personality

sexual harassment Unwanted sexual attention that creates an ad- verse or hostile work environment.

diversity The host of individual dif- ferences that make people different from and similar to each other.

Go to www.mcgrawhillconnect.com for an interactive exercise to test your knowledge of the layers of diversity.

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36 Part One The World of Organizational Behavior

you are married and have children, and your work experiences. These dimensions also exert a signifi cant infl uence on our perceptions, behavior, and attitudes.

Consider religion as an illustration. Organizations are paying more attention to religious discrimination in light of the fact that the frequency of religious dis- crimination claims has doubled in the last 15 years. Employment laws require organizations to “reasonably accommodate employees’ sincerely held religious practices unless doing so would impose an undue hardship on the employer. A reasonable religious accommodation is any adjustment to the work environment that will allow the employee to practice his religion. Examples of reasonable ac- commodation include: fl exible scheduling, voluntary substitutions or swaps, job reassignments and lateral transfers, and modifi cation of grooming requirements.” 5

Back to the Chapter-Opening Case

Which layers of diversity from Figure 2–1 contributed to the sexual harassment experi- enced by Michelle Barfi eld?

The fi nal layer of diversity includes organizational dimensions such as senior- ity, job title and function, and work location.

Affirmative Action and Managing Diversity Effectively managing diversity requires organizations to adopt a new way of think- ing about differences among people. Rather than pitting one group against another, managing diversity entails recognition of the unique contribution every employee can make. Companies should not try to manage diversity because it is the “socially acceptable” thing to do. Rather, managing diversity is the right thing to do because it helps organizations to achieve their business goals. For example, Cisco, Whole Foods Market, Container Store, Adobe Systems, and Zappos.com focus on hir- ing and promoting diverse employees as part of a strategy to create and market products appealing to a broader and more diverse customer base. 6 This section highlights the differences between affi rmative action and managing diversity.

Affirmative Action Affi rmative action is an outgrowth of equal employ- ment opportunity (EEO) legislation. The goal of this legislation is to outlaw dis- crimination and to encourage organizations to proactively prevent discrimination. Discrimination occurs when employment decisions about an individual are due to reasons not associated with performance or are not related to the job. For ex- ample, organizations cannot discriminate on the basis of race, color, religion, na- tional origin, sex, age, physical and mental disabilities, and pregnancy.

In contrast to the proactive perspective of EEO legislation, affi rmative action is an artifi cial intervention aimed at giving management a chance to correct an imbalance, an injustice, a mistake, or outright discrimination that occurred in the past. Affi rmative action does not legitimize quotas. Quotas are illegal. They can only be imposed by judges who conclude that a company has engaged in discrimi- natory practices. It also is important to note that under no circumstances does af- fi rmative action require companies to hire unqualifi ed people.

Although affi rmative action created tremendous opportunities for women and minorities, it does not foster the type of thinking that is needed to effectively manage diversity. For example, a meta-analysis summarizing 35 years of research involving 29,000 people uncovered the following results: (1) affi rmative action plans are perceived more negatively by white males than women and minorities because it is perceived to work against their own self-interests; (2) affi rmative ac- tion plans are viewed more positively by people who are liberals and Democrats

LO.2

Go to www.mcgrawhillconnect.com for a self-assessment on appreciating and valuing diversity.

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Chapter Two Managing Diversity: Releasing Every Employee’s Potential 37

than conservatives and Republicans; and (3) affi rmative action plans are not sup- ported by people who possess racist or sexist attitudes. 7

Affi rmative action programs also were found to negatively affect the women and minorities expected to benefi t from them. Research demonstrated that women and minorities, supposedly hired on the basis of affi rmative action, felt negatively stigmatized as unqualifi ed or incompetent. They also experienced lower job satis- faction and more stress than employees supposedly selected on the basis of merit. 8 Another study, however, showed that these negative consequences were reduced for women when a merit criterion was included in hiring decisions. In other words, women hired under affi rmative action programs felt better about themselves and exhibited higher performance when they believed they were hired because of their competence rather than their gender. 9

Managing Diversity Managing diversity entails enabling people to perform up to their maximum potential. It focuses on changing an organization’s culture and infrastructure such that people provide the highest productivity possible. Sodexo, a fi rm in the hospitality industry with 380,000 employees in 80  coun- tries, is a good example of a company that effectively manages diversity. Sodexo was rated by DiversityInc in 2010 as the very best company for diversity based on its annual 200-question survey of 449 fi rms (see Real World/Real People on page 38). 10 Ann Morrison, a diversity expert, conducted a study of 16 organiza- tions that successfully managed diversity. Her results uncovered three key strate- gies for success: education, enforcement, and exposure.

She describes them as follows:

Example. The education component of the strategy has two thrusts: one is to pre- pare nontraditional managers for increasingly responsible posts, and the other is to help traditional managers overcome their prejudice in thinking about and inter- acting with people who are of a different sex or ethnicity. The second component of the strategy, enforcement, puts teeth in diversity goals and encourages behavior change. The third component, exposure to people with different backgrounds and characteristics, adds a more personal approach to diversity by helping managers get to know and respect others who are different. 11

You can see from this description that Sodexo uses all of these diversity strategies. In summary, both consultants and academics believe that organizations should

strive to manage diversity rather than simply using affi rmative action. More is said about managing diversity later in this chapter.

Building the Business Case for Managing Diversity The rationale for managing diversity goes well beyond legal, social, and moral reasons. Quite simply, the primary reason for managing diversity is the ability to grow and maintain a business in an increasingly competitive marketplace. Con- sider what William Weldon, Chairman and CEO of Johnson & Johnson, had to say about managing diversity.

discrimination Occurs when employment decisions are based on factors that are not job related.

affi rmative action Focuses on achieving equality of opportunity in an organization.

managing diversity Creating organizational changes that enable all people to perform up to their maximum potential.

TO THE POINT Which of the managerial implications of diversity are consistent with recommendations for reconciling the effects of diverse work environments?

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38 Part One The World of Organizational Behavior

Example. Diversity and inclusion are part of the fabric of our businesses and are vital to our future success worldwide. The principles of diversity and inclusion are rooted in Our Credo [the company’s values] and enhance our ability to deliver products and services to advance the health and well-being of people throughout the world. We cannot afford to reduce our focus on these critical areas in any business climate. 12

Many companies understand and endorse this proposition. Research also indi- rectly supports the logic of this strategy. For example, a study of 207 companies in 11 industries demonstrated that fi nancial performance was higher when the organization’s top management team (TMT) was diverse and collocated in the same location. 13

Organizations cannot use diversity as a strategic advantage if employees fail to contribute their full talents, abilities, motivation, and commitment. It is thus essential for an organization to create an environment or culture that allows all employees to reach their full potential. Managing diversity is a critical component of creating such an environment.

This section explores the business need to manage diversity by fi rst reviewing the demographic trends that are creating an increasingly diverse workforce. We

The deep leadership commitment to diversity is an integral part of Sodexo’s moral fi ber and strong ethics. Global CEO Michel Landel, U.S. President and CEO George Chavel, and Senior Vice President and Global Chief Diversity Offi cer Dr. Rohini Anand are constantly on the front lines of new and expanded diversity initiatives.

Sodexo has led every other company in its ability to implement, measure and assess strong internal diversity initiatives. Its Spirit of Mentoring program is an example for all organizations of a focused, practical and extremely comprehensive mentoring effort that includes advance training and benchmarks at regular intervals to examine how mentoring pairs are relating to each other and ac- complishing goals.

Sodexo is at the forefront of creative ways to examine the ROI of diversity initiatives. Recently, for example, the company undertook a comprehensive study of more than 1,700 members of employee-resource groups to under- stand their perceived benefi ts of group participation.

The company’s diversity training, mandatory for its en- tire work force, offers an example to others. Over the past fi ve years, Sodexo has developed an integrated metrics tool that assesses behavior at all levels of the organization, including the C-suite. The company mea- sures its progress with its Sodexo Diversity Index, an innovative scorecard that tracks both quantitative and qualitative results.

Sodexo also reaches out externally, holding forums and meetings with clients to improve their diversity

initiatives and to help them understand how critical diversity is to everyone’s success. Sodexo’s strong reputation and proven success in diversity has led many of its clients to tell DiversityInc that’s why they enhanced their business relationship with the food- service company.

How did Sodexo use the diversity strategies of education, enforcement, and exposure?

SOURCE: Excerpted from “No. 1: Sodexo.” Retrieved December 27, 2010, from http://www.diversityinc.com/article/7252/.

real WORLD // real PEOPLE Sodexo Ranked as Best Company for Managing Diversity

Part of Sodexo’s success is attributed to its progressive approach toward managing diversity. Would you like to work at the company?

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Chapter Two Managing Diversity: Releasing Every Employee’s Potential 39

then summarize the managerial implications of demographic diversity and review evidence pertaining to the positive and negative effects associated with diverse work environments.

Increasing Diversity in the Workforce Workforce demographics, which are statistical profi les of the characteristics and composition of the adult working population, are an invaluable human-resource planning aid. They enable managers to anticipate and adjust for surpluses or short- ages of appropriately skilled individuals. Consider the implications associated with an aging population that will be retiring in record numbers over the next decade, a US birthrate that is too low to provide enough workers to meet future demands, a workforce in 2050 that is composed of 55% minority employees, a labor shortage caused by a population that does not possess the knowledge and skills needed in a knowledge economy, and one in seven US adults who lack the literacy skills to read anything beyond a child’s picture book. 14 Experts predict that these demographic trends will create a serious shortage of skilled workers in the future.

Moreover, general population demographics give managers a preview of the values and motives of current and future employees. Demographic changes in the US workforce during the last two or three decades have immense implications for organizational behavior. This section explores the managerial implications of four demographic-based characteristics of the workforce: (1) women navigate a labyrinth after breaking the glass ceiling, (2) racial groups are encountering a glass ceiling and perceived discrimination, (3) there is a mismatch between work- ers’ educational attainment and occupational requirements, and (4) generational differences in an aging workforce.

Women Navigate a Labyrinth after Breaking the Glass Ceiling The Wall Street Journal journalists—Carol Hymowitz

and Timothy Schellhardt—coined the term glass ceiling in 1986. The term glass ceiling was used to represent an absolute barrier or solid roadblock that prevented women from advancing to higher-level positions. This ceiling resulted in women fi nding themselves stuck in lower-level jobs, ones that do not have profi t-and-loss responsibility, and those with less visibility, power, and infl uence. There are a variety of statistics that support the prior existence of a glass ceiling. For example, women earned 77 cents on the dollar relative to men’s earnings in 2010, and women received fewer stock options than male executives, even after controlling for level of education, performance, and job function. 15 A recent longitudinal study of 4,100 MBA students from leading business schools also revealed four key trends: (1) men started their careers at higher levels than women even after controlling for work experience, industry, and region; (2) men reported higher starting salaries after controlling for job levels and industry; (3) men moved up the career ladder further and faster than women; and (4) men had higher career satisfaction over time than women. 16 These differences are a function of several potential causes: 17

• Women face discrimination. • Women spend more time handling domestic and child care issues than men. • Women encounter more obstacles to their leadership and authority than

men (e.g., negative stereotypes). • Women accumulate less continuous work experience than men because they

periodically exit the workforce for family or motherhood.

LO.3

workforce demographics Statisti- cal profi les of adult workers.

glass ceiling Invisible barrier blocking women and minorities from top management positions.

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40 Part One The World of Organizational Behavior

• Women have less social capital and lower breadth of personal networks than men.

• Organizations have increased demands for longer hours, travel, and reloca- tion and these demands confl ict with the domestic roles held by many mar- ried women.

Back to the Chapter-Opening Case

Which of the potential causes of discrimination played a role in Barfi eld’s experience at the Arizona Department of Corrections?

Carol Hymowitz, the same journalist who initially introduced the metaphor of a glass ceiling, wrote an article in The Wall Street Journal in 2004 that concluded women had broken through the glass ceiling. This led renowned researcher Alice Eagly and her colleague Linda Carli to conduct a thorough investigation into the organizational life of women. They summarized their fi ndings in a 2007 book titled Through the Labyrinth. These authors agreed with Hymowitz after analyzing many types of longitudinal data. We arrived at the following results after updat- ing data reported in Eagly and Carli’s book. There were many more female CEOs in 2010 (12 and 26 female CEOs within Fortune 500 and Fortune 1000 fi rms, re- spectively) and more women in managerial, professional, and related occupations (51% in 2009) than there were in the 1980s and 1990s. 18 Statistics further showed that women made great strides in terms of (1) educational attainment (women earned the majority of bachelor’s, master’s, professional, and PhD degrees from 2006 through 2010); (2) holding seats on boards of directors of Fortune 500 fi rms (a 6.1% increase between 1995 and 2010); (3) obtaining leadership positions in educational institutions (in 2010, women represented 18.7% of college presidents and 29.9% of board members); and (4) receiving federal court appointments (in

2010, 22% and 28% of federal district court judges and US circuit court judges, respectively, were women). 19

You can interpret the above statistics in one of two ways. On the one hand, you might believe that women are underpaid and underrepresented in leadership positions and that they are victims of discriminatory organizational practices. Alternatively, you can agree with Alice Eagly and Linda Carli’s conclusion that

Example. women have made substantial progress but still have quite far to go to achieve equal representation as leaders. . . . These statis- tics demonstrate considerable social change and show that women’s careers have become far more successful than they were in the past. Men still have more authority and higher wages, but women have been catching up. Because some women have moved into the most elite leadership roles, absolute barriers are a thing of the past. 20

These authors believe that women are not victims. Rather, they propose that a woman’s career follows a pattern more characteris- tic of traveling through a labyrinth.

A labyrinth is represented by a maze and is defi ned as “an intricate structure of interconnecting passages through which it is diffi cult to fi nd one’s way.” 21 Eagly and Carli used the labyrinth metaphor because they believe that a woman’s path to success is

Indra Nooyi, CEO of Pepsi, is a good example of someone who has successfully moved through a career labyrinth. She was rated as the most powerful woman in business in 2009 and 2010 by Fortune. She is very focused on growing Pepsi’s revenues by offering healthier food and beverages.

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Chapter Two Managing Diversity: Releasing Every Employee’s Potential 41

not direct or simple, but rather contains twists, turns, and obstructions, particu- larly for married women with children. Managers and organizations thus are ad- vised to develop policies, procedures, and programs aimed at helping women to navigate their way through the maze of career success (see Real World/Real People featuring Julie Fisher at CareFirst BlueCross Blueshield above). More will be said about this later in this section.

Racial Groups Are Encountering a Glass Ceiling and Perceived Discrimination Historically, the United States

has been a black-and-white country. The percentage change in US population between 2000 and 2050 by race reveals that this pattern no longer exists (see Fig- ure 2–2 ). Figure 2–2 shows that Asians and Hispanics are expected to have the largest growth in population between 2000 and 2050. The Asian population will triple to 33 million by 2050, and the Hispanics will increase their ranks by 118% to 102.6 million. Hispanics will account for 25% of the population in 2050. All told, the so-called minority groups will constitute approximately 55% of the workforce in 2050 according to the Census Bureau.

Unfortunately, three additional trends suggest that current-day minority groups are experiencing their own glass ceiling. First, minorities in general are advancing less in the managerial and professional ranks than whites. For example, whites, blacks, Asians, and Hispanics or Latinos held 38%, 29.21%, 48.8%, and 19.4% of all managerial, professional, and related occupations in the United States in 2009. 22 Second, the number of race-based charges of discrimination that were deemed to show reasonable cause by the US Equal Employment Opportunity Commission increased from 294 in 1995 to 1,061 in 2008. Companies paid a total of $79.3 mil- lion to resolve these claims outside of litigation in 2008. 23 Third, minorities also

LO.4

Julie Fisher began working for the company about 25 years ago as a claims examiner. “It’s such a big com- pany with so much opportunity,” It helped, too, that Fish- er’s immediate bosses focused heavily on development and often acted as mentors, both formally and informally.

In fact, their mere presence was inspirational. “I would see different women here in the company being very successful and progressing and being valued,” says Fisher. “There are a number of females in signifi cant roles here and they are very accessible.”

In fact, 62 percent of CareFirst’s management team is female. And the organization has long had family-friendly policies in place—like fl exible scheduling. “I’ve always had management that was very fl exible,” says Fisher, who had four children while working at CareFirst and at times had to take advantage of that fl exibility. “In turn, I’ve made it a practice to ensure that fl exibility was there as well” for other employees.

And now that her children are in college, Fisher is equally grateful for the company’s benefi ts, including its retirement and saving plans.

SOURCE: Excerpted from C B Antoniades, “Best Places to Work 2010,” Baltimore Magazine.net, February 2010, http://www .baltimoremagazine.net/features/2010/02/best-places-to-work-2010.

real WORLD // real PEOPLE CareFirst BlueCross BlueShield Helps Employees Move Up the Career Ladder

Julie Fisher is very happy with her employer’s approach toward managing diversity.

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42 Part One The World of Organizational Behavior

tend to earn less personal income than whites. Median annual earnings in 2009 were $51,861, $32,584, $65,469, and $38,039 for whites, blacks, Asians, and His- panics, respectively. Interestingly, Asians had the highest median income. 24 Finally, a number of studies showed that minorities experienced more perceived discrimi- nation, racism-related stress, and less psychological support than whites. 25

Mismatch between Educational Attainment and Occupational Requirements Approximately 28% of the labor force has a college degree, and college graduates earn substantially more than workers with less education. 26 At the same time, however, three trends suggest a mismatch between educational attainment and the knowledge and skills needed by employers. First, recent stud- ies show that college graduates, while technically and functionally competent, are lacking in terms of teamwork skills, critical thinking, and analytic reason- ing. Second, there is a shortage of college graduates in technical fi elds related to science, math, and engineering. Third, organizations are fi nding that high-school graduates working in entry-level positions do not possess the basic skills needed to perform effectively. This latter trend is partly due to a national high-school gradu- ation rate of only 75% and the existence of about 32 million adults in the United States that are functionally illiterate. 27 Literacy is defi ned as “an individual’s abil- ity to read, write, and speak English, compute and solve problems at levels of profi ciency necessary to function on the job and in society, to achieve one’s goals, and develop one’s knowledge and potential.” 28 Illiteracy costs corporate America

SOURCE: G C Armas, “Almost Half of US Likely to Be Minorities by 2050,” Arizona Republic, March 18, 2004, p A5. US Census Bureau, Table 1a, “Projected Population of the US by Race and Hispanic Origin: 2000–2050,” www.census.gov/ipc/www/usinterimproj/. Used by permission of the Associated Press.

0%

Anglo Black Asian Hispanic

2000–2010

Anglo Black Asian Hispanic

Associated PressSource: US Census Bureau

201.1 mil 40.5 14.2 47.8

205.9 mil 45.4 18.0 59.8

209.2 mil 50.4 22.6 73.1

210.3 mil 55.9 28.0 87.6

210.3 mil 61.4 33.4 102.6

2010–2020 2020–2030 2030–2040 2040–2050 0

5%

10%

15%

20%

25%

30%

35%

Population, in millions

fi gure 2–2 Percentage Change in US Population by Race

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Chapter Two Managing Diversity: Releasing Every Employee’s Potential 43

around $60 billion a year in lost productivity. These statistics are worrisome to both government offi cials and business leaders.

The key issue confronting organizations in the United States, and any country that wants to compete in a global economy, is whether or not the population has the skills and abilities needed to drive economic growth. Unfortunately, results from a study commissioned by the National Center on Education and the Econ- omy suggests that the United States is losing ground on this issue. Findings were summarized in a book titled Tough Choice or Tough Times: The Report of the New Commission on the Skills of the American Workforce. The authors arrived at the following conclusions based on their analysis.

Example. Whereas for most of the 20th century the United States could take pride in having the best-educated workforce in the world, that is no longer true. Over the past 30 years, one country after another has surpassed us in the proportion of their entering workforce with the equivalent of a high-school diploma, and many more are on the verge of doing so. Thirty years ago, the United States could lay claim to having 30 percent of the world’s population of college students. Today that proportion has fallen to 14 percent and is continuing to fall. While our international counterparts are increasingly getting more education, their young people are getting a better education as well. American students and young adults place anywhere from the middle to the bottom of the back in all three continuing comparative studies of achievement in mathematics, science, and general literacy in the advanced industrial nations. While our relative position in the world’s education league tables has continued its long slow decline, the structure of the global economy has continued to evolve. Every day, more and more of the work that people do ends up in a digitized form. From X rays used for medical diagnostic purposes, to songs, movies, architec- tural drawings, technical papers, and novels, that work is saved on a hard disk and transmitted instantly over the Internet to someone near or far who makes use of it in an endless variety of ways. Because this is so, employers everywhere have access to a worldwide workforce composed of people who do not have to move to partici- pate in work teams that are truly global. Because this is so, a swiftly rising number of American workers at every skill level are in direct competition with workers in every corner of the globe. 29

These conclusions underscore the fact that the mismatch between educational at- tainment and occupational requirements have both short- and long-term implica- tions for organizations and countries alike. American companies are more likely to outsource technical work to countries like India and China, to hire more im- migrants to fi ll entry-level positions, to spend more money on employee training, and to use phased retirement programs that encourage skilled employees to work beyond retirement age.

Generational Differences in an Aging Workforce America’s popu- lation and workforce are getting older. By 2011, half of the US workforce will be over 50 years of age, and 80% will be over 50 by 2018. 30 Life expectancy is increas- ing as well. The number of people living into their 80s is increasing rapidly, and this group disproportionately suffers from chronic illness. The United States is not the only country with an aging population. The United Nations estimates that 33% of the population in developed countries will be over the age of 60 by 2050, and one in three people will be pensioners. These statistics led some experts to conclude that the global fi nancial crises in 2009–2010 “will be nothing compared with the costs of an aging global population.” 31

An aging population in the United States underscores a potential skill gap in the future. As those employees in the Baby-Boom generation retire—the

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44 Part One The World of Organizational Behavior

78 million people born between 1946 and 1964—the US workforce will lose the skills, knowledge, experience, and relationships possessed by the more than a quarter of all Americans. This situation will likely create skill shortages in fast- growing technical fi elds. Proactive companies like CVS Caremark have already implemented programs aimed at overcoming this knowledge transfer problem (see Real World/Real People above).

In addition to the challenges associated with an aging workforce, the four generations of employees working together underscores the need for managers to effectively deal with generational differences in values, attitudes, and behaviors among the workforce: A fi fth generation will enter the workforce around 2020. For example, companies such as IBM, Lockheed Martin, Ernst & Young LLP, and Aetna have addressed this issue by providing training workshops on generational diversity.

Table 2–1 presents a summary of generational differences that exist across commonly labeled groups of people: Traditionalists, Baby Boomers, Gen Xers, Millennials (also knows as Gen Ys), and the forthcoming Gen 2020 group. Before examining these proposed differences, it is important to note that these labels and distinctions are generalizations and are used for the sake of discussion. There are always exceptions to the characterizations shown in Table 2–1 and all conclusions should be interpreted with caution. 32

Table 2–1 reveals that Millennials account for the largest block of employees in the workforce, followed by Baby Boomers. This is important because many Millennials are being managed by Boomers who possess a very different set of personal traits. Traits, which are discussed in Chapter 5, represent stable physi- cal and mental characteristics that form an individual’s identity. Confl icting traits are likely to create friction between people. For example, the workaholic and

CVS decided to implement a program aimed at transfer- ring knowledge from older workers to younger ones upon learning that 7 percent of its employees were over 50.

Part of CVS’s success stems from providing fl exible pro- grams and benefi ts that particularly appeal to older work- ers. A prime example is its “Snowbird” program, which allows older workers to transfer to different CVS/pharmacy locations on a seasonal basis. . . . “The retention rate of the snowbirds is signifi cantly higher than the industry aver- age,” says David L. Casey, vice president, diversity offi cer for CVS Caremark. The program enables CVS to manage the swell of business in warm-climate stores during the winter, and the snowbirds drive customer loyalty. . . .

Another program CVS is piloting in Chicago has older pharmacists—some still working, some retired—mentor pharmacy technicians and high school students. It has proven to be as much a learning experience for the men- tors as the mentees.

How does the Snowbird program drive customer loyalty?

SOURCE: Excerpted from J Mullich, “Coming of Age,” The Wall Street Journal, October 7, 2010, p B6.

real WORLD // real PEOPLE CVS Caremark Implements Programs to Retain and Transfer Knowledge of Older Employees

CVS Caremark operates more pharmacies than any other company in the United States. The company credits part of its success to its progressive approach toward diversity.

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TRADITIONALISTS BABY BOOMERS GEN XERS MILLENNIALS (GEN YS) GEN 2020

Birth Time Span

1925–1945 1946–1964 1965–1979 1980–2001 2002–

Current Population

38.6 million 78.3 million 62 million 92 million 23 million

Key Historical Events

Great Depression, World War II, Korean War, Cold War era, Rise of suburbs

Vietnam War, Watergate, assassinations of John and Robert Kennedy and Martin Luther King, women’s rights, Kent State killings, fi rst man on the moon

MTV, AIDS epidemic, Gulf War, fall of Berlin Wall, Oklahoma City bombing, 1987 stock market crash, Bill Clinton-Monica Lewinsky scandal

September 11th terrorist attack, Google, Columbine High School shootings, Enron and other corporate scandals, wars in Iraq and Afghanistan, Hurricane Katrina, fi nancial crisis of 2008 and high unemployment

Social media, election of Barack Obama, fi nancial crisis of 2008 and high unemployment

Broad Traits Patriotic, loyalty, discipline, conformist, high work ethic, respect for authority

Workaholic, idealistic, work ethic, competitive, materialistic, seeks personal fulfi llment

Self-reliance, work/life balance, adaptable, cynical, distrust authority, independent, technologically savvy

Entitled, civic minded, close parental involvement, cyberliteracy, appreciate diversity, multitasking, work/life balance technologically savvy

Multitasking, online life, cyberliteracy, communicate fast and online

Defi ning Invention

Fax machine Personal computer

Mobile phone Google and Facebook

Social media and iPhone apps

table 2–1 Generational Differences

SOURCE: Adapted from J C Meister and K Willyerd, The 2020 Workplace (NewYork: Harper Collins, 2010), pp 54–55; and R Alsop, The Trophy Kids Grow Up (San Francisco: Jossey-Bass, 2008) p. 5.

competitive nature of Boomers is likely to confl ict with the entitled and work/life balance perspective of Millennials. As discussed in the next section, managers and employees alike will need to be sensitive to the generational differences highlighted in Table 2–1 in the pursuit of effectively managing diversity.

We would like to close our discussion about age by highlighting results from two recent meta-analyses. Researchers in the fi rst study wanted to investigate the relationship between age and 10 dimensions of performance: core task perfor- mance, creativity, performance in training workshops, helping behavior at work, safety performance, counterproductive work behaviors, aggression at work, sub- stance abuse, tardiness, and absenteeism. Results demonstrated that older workers displayed more helping and safety-oriented behavior. Older workers also exhibited less workplace aggression, substance abuse, tardiness, and absenteeism. Age was predominantly unrelated to core task performance, creativity, and performance in training workshops. 33 The second meta-analysis summarized research from over 800 studies. Results revealed that age was positively related to job attitudes toward

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work tasks, colleagues, supervisors, and organizations as a whole. 34 These two meta-analyses suggest that older employees can make valuable contributions in today’s organizations.

Managerial Implications of Demographic Diversity It is important for organizations to draw the best talents and motivation from employees given the globally based and technologically connected nature of busi- ness. Organizations simply cannot afford to alienate segments of the workforce. Consider the issue of sexual orientation. A 2010 National Survey of Health and Behavior in the United States revealed that approximately 7% of women and 8% of men identify themselves as lesbian, gay, or bisexual. It also is currently legal in 30 states to fi re employees who are lesbian or gay, and it is legal in 37 states to fi re transgender individuals. 35 This situation is likely to create negative job attitudes and feelings of marginalization for lesbian, gay, bisexual, and transgender (LGBT) people. 36 Corporate law fi rm Bingham McCutchen and software developer Adobe Systems have tried to overcome this problem by instituting programs such as ad- ditional benefi ts for transgender employees and same-sex partner benefi ts. 37

Regardless of sexual orientation, gender, race, or age, all organizations need to hire, retain, and develop a diverse workforce that provides a deeper pool of talent and unique perspectives that help the organization identify and meet the needs of a diverse customer base. For example, a Citizens Union Bank branch in Louisville, Kentucky, designed and staffed the branch with the goal of attracting more Latin American customers. The interior contains “bright, colorful walls of yellows and blues, large-scale photos of Latin American countries, comfortable couches, sit-down desks, a children’s play area, a television tuned to Hispanic pro- gramming and even a vending area stocked with popular Latin American brand soft drinks and snacks. Along with its interior design, this branch has a different name: ‘Nuestro Banco,’ Spanish for ‘Our Bank.’ ” 38 Branch deposits are setting records, and the CEO is planning to use this same model in other locations. The point to remember is that companies need to adopt policies and procedures that meet the needs of all employees. As such, programs such as day care, elder care, fl exible work schedules, and benefi ts such as paternal leaves, less-rigid relocation policies, concierge services, and mentoring programs are likely to become more popular. In addition to this general conclusion, this section summarizes some unique managerial implications associated with effectively managing diversity in regards to demographic trends related to gender, race, education, and age.

Managing Gender-Based Diversity Special effort is needed to help women navigate through the labyrinth of career success. Organizations can do this by providing women the developmental assignments that prepare them for promotional opportunities. 39 Laura Desmond, CEO of Starcom Media Vest/The Americas, suggests that women need to help themselves advance to senior-level positions. She believes that “getting to the top requires setting goals and persever- ing—along with a willingness to seek stretch assignments that challenge and yield broader experiences.” Andrea Jung, chair and CEO of Avon Products, further rec- ommends that women should fi nd a company or industry that they love because “the hard work and sacrifi ces required are only possible if you are fully engaged in your company and enjoy what you do.” 40

Women also can help their own cause by following seven recommendations proposed by Alice Eagly and Linda Carli, authors of Through the Labyrinth . 41 First, focus on being exceptionally competent and seek mentors or sponsors: Mentoring is discussed in Chapter 3. Research shows that men get promoted more frequently than women because they are more likely to get sponsored by their bosses and informal mentors. 42 Second, network to build social capital. Social capital, as you may recall from Chapter 1, represents the totality of one’s professional and personal relationships. Learning to play the game of golf may

LO.5

Go to www.mcgrawhillconnect.com for an interactive exercise to test your knowledge of generational differences in the workplace.

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Chapter Two Managing Diversity: Releasing Every Employee’s Potential 47

represent one viable strategy in this pursuit. For example, Susan Reed, editor-in- chief of Golf for Women, concluded that “[w]omen are just now learning what men have known for years: that golf may be one of the best relationship-building tools there is—both for business and for pleasure. Women resist going out for the afternoon because they’re generally too responsible, shortsightedly so. Like men, they need to realize that leaving the work on the desk (which will be there anyway) and going out to play golf with a valuable business prospect is a good decision.” 43

Third, seek work/life balance by delegating housework or hiring domestic help. Fourth, improve your negotiating skills. Fifth, take credit for your accomplish- ments; men do. Sixth, work toward creating a partnership with your spouse that leads to a mutually supportive relationship. Interviews with female executives sug- gest that a supportive spouse is a key factor in their career success. For example, the spouse of Indra Nooyi, CEO of PepsiCo, quit his job so that he could take on more responsibility for raising their children and running the house. 44 Finally, de- velop an interpersonal style that balances the need to be assertive and communal.

Managing Racially Based Diversity Organizations are encouraged to educate employees about negative stereotyping regarding people of color, particu- larly when it comes to selecting and promoting leaders. Negative stereotypes not only block qualifi ed people from obtaining promotions, but they can undermine a person’s confi dence in their ability to lead. 45 Given the projected increase in the number of Hispanics entering the workforce over the next 25 years, managers should consider progressive methods to recruit, retain, and integrate this segment of the population into their organizations. For example, Miami Children’s Hos- pital and Shaw Industries in Dalton, Georgia, attempted to improve employee productivity, satisfaction, and motivation by developing customized training pro- grams to improve the communication skills of their Spanish-speaking employees. 46 Research further reveals that the retention and career progression of minorities can be signifi cantly enhanced through effective mentoring.

David Thomas, a researcher from Harvard University, conducted a three-year study of mentoring practices at three US corporations: a manufacturer, an elec- tronics company, and a high-tech fi rm. His results revealed that successful people of color who advanced the furthest had a strong network of mentors and sponsors who nurtured their professional development. Findings also demonstrated that people of color should be mentored differently than their white counterparts. He recommended that organizations

Example. should provide a range of career paths, all uncorrelated with race, that lead to the executive suite . . . . Achieving this system, however, would require in- tegrating the principles of opportunity, development, and diversity into the fabric of the organization’s management practices and human resource systems. And an important element in the process would be to identify potential mentors, train them, and ensure that they are paired with promising professionals of color. 47

Managing Education-Based Diversity Mismatches between the amount of education needed to perform current jobs and the amount of education pos- sessed by members of the workforce are growing. This trend creates two potential problems for organizations. First, there will be a shortage of qualifi ed people in technical fi elds. To combat this issue, both Lockheed Martin and Agilent Technol- ogies offer some type of paid apprenticeship or internship to attract high-school students interested in the sciences. Other companies such as State Street, Fidelity, and Cisco are attempting to overcome skill gaps by encouraging employees to participate in skills-based volunteering projects. The goal of these projects is to increase targeted skills through volunteer activities. 48

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Second, underemployment among college graduates threatens to erode job satisfaction and work motivation. As well-educated workers begin to look for jobs commensurate with their qualifi cations and expectations, absenteeism and turnover likely will increase. This problem underscores the need for job redesign (see the discussion in Chapter 8). In addition, organizations will need to consider interventions, such as realistic job previews and positive reinforcement programs (discussed in Chapter 9), to reduce absenteeism and turnover. On-the-job remedial skills and literacy training will be necessary to help the growing number of drop- outs and illiterates cope with job demands.

Managing Age-Related Diversity Organizations can take advantage of the human and social capital possessed by older employees by implementing pro- grams that encourage employees to stay employed and transfer their knowledge to others. For example, BMW redesigned a plant’s production line in Lower Bavaria in order to help older employees cope with the demands of physically demanding jobs and to reduce absenteeism (see Real World/Real People above). BMW expe- rienced a 7% increase in productivity and a signifi cant reduction in absenteeism based on these changes. 49 In order to make this type of strategy work, however, organizations will need to encourage Baby Boomers to remain in the workforce in lieu of retiring. The following seven initiatives can help to keep older workers engaged and committed to working. 50

1. Provide challenging work assignments that make a difference to the fi rm. 2. Give the employee considerable autonomy and latitude in completing a task.

Many of the ideas implemented in the 2017 line were physical changes to the workplace that would reduce wear and tear on workers’ bodies and thus the likeli- hood that workers would call in sick. The new wooden fl ooring together with weight-adapted footwear, for example, reduced joint strain and exposure to static electricity jolts. The line workers also installed special chairs at several workstations, which allowed them to work sitting down or to relax for short periods during breaks . . . .

Design and equipment changes were complemented by changes in work practices. The line introduced job rotation across workstations during a shift in order to bal- ance the load on workers’ bodies . . . .

In addition, a physiotherapist developed strength and stretching exercises, which he did with the workers every day for the fi rst few weeks.

Why does this example represent effective man- agement of diversity?

SOURCE: Excerpted from C H Loch, F J Sting, N Bauer, and H Mauermann, “How BMW Is Defusing the Demographic Time Bomb,” Harvard Business Review, March 2010, pp 101–2.

real WORLD // real PEOPLE BMW Effectively Redesigns Its Plant in Bavaria

BWM designed chairs like this one to help employees do their jobs more effectively and comfortably. Would you like to sit on this chair throughout the work day?

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Chapter Two Managing Diversity: Releasing Every Employee’s Potential 49

3. Provide equal access to training and learning opportunities when it comes to new technology.

4. Provide frequent recognition for skills, experience, and wisdom gained over the years.

5. Provide mentoring opportunities whereby older workers can pass on accu- mulated knowledge to younger employees.

6. Ensure that older workers receive sensitive, high-quality supervision. 7. Design a work environment that is both stimulating and fun.

Generational differences outlined in Table 2–1 can affect employee motiva- tion and productivity, thereby necessitating a need to educate employees about working with diverse employees. For example, in-depth interviews with 50 work- ers over the age of 50 revealed that older workers felt blocked from important communication networks by younger employees and that their experience and skills were not valued. One respondent commented that “when older colleagues spoke during company meetings, younger colleagues would yawn, avoid eye contact with the speaker, doodle, or send text or instant messages under the table. 51 In contrast, some Gen Y employees believe that Baby Boomers want to be rewarded for the amount of time they spend at work rather than pro- ductivity. Best Buy’s headquarters has attempted to reconcile this concern by creating an evaluation system that judges people only on task completion and performance. People are encouraged to work only as many hours as needed to get the job done. 52

Further, Gen X employees also report feeling “stuck in the middle.” A Gen Xer named Michael noted, “I have an executive management team who are 8 to 12 years older than I am, with no plans for retirement in the near future. This leaves me stuck. I have been searching for business opportunities due to my dis- trust of Corporate America’s motives.” 53 Companies clearly need to fi nd ways to motivate and retain Gen X employees who may be stuck in organizational hierarchies.

Traditional and Boomer managers also need to consider their approach to- ward managing the technologically savvy Gen Xers and Gen Ys. For example, Gen Xers and Ys are more likely to visit social networking sites during the work- day, often perceiving this activity as a “virtual coffee break.” In contrast, Tradi- tional and Boomer managers are more likely to view this as wasted time, thereby leading to policies that attempt to shut down such activity. Experts suggest that restricting access to social media will not work in the long run if one wants to motivate younger employees. 54

Finally, the shortage of skilled employees in the future underscores the need for organizations to re- cruit Millennials. Not only do Gen Ys represent the largest block of employees in the workforce (see Table 2–1), but they possess traits and skills needed in an increasingly technologically advanced economy. Organizations are responding to this issue by trying to create work environments that meet the needs of this segment of the workforce. For example, Growth Works Capital, Ernst & Young, Philip Morris USA, IBM, and Bearing Point implemented new rewards programs and job design interventions aimed at at- tracting and retaining Gen Y employees. Unilever similarly created a “consumerization architect” posi- tion that focuses on helping employees use popular technology after learning that Gen Y employees were dissatisfi ed with the company’s use of information technology. 55

Age-related diversity can cause unnecessary friction in the workplace. How can managers help facilitate helpful interactions across all generations?

Go to www.mcgrawhillconnect.com for an interactive comprehension case exercise to learn how Leaseplan manages diversity.

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The Positive and Negative Effects of Diverse Work Environments Earlier in this chapter we stated that effectively managing diversity is not only a good thing to do in order to attract and retain the most talented employees, but it makes good business sense. Although one can easily fi nd testimonials from man- agers and organizations supporting this conclusion, we need to examine the valid- ity of this claim by considering the evidence provided by OB research. As you will learn shortly, this research reveals that there are both positive and negative effects of diversity on important work outcomes. Organizational behavior researchers have explained these confl icting results by integrating two competing explanations of how diversity impacts employee attitudes, behavior, and performance. These explanations are based on what is called social categorization theory and informa- tion/decision-making theory. This section focuses on helping you understand how to garner the positive benefi ts of diversity by presenting a process model of diver- sity that integrates these two explanations.

Social Categorization Theory A team of OB researchers describe the social categorization theory of diversity as follows:

Example. The social categorization perspective holds that similarities and differ- ences are used as a basis for categorizing self and others into groups, with ensu- ing categorizations distinguishing between one’s own in-group and one or more out-groups. People tend to like and trust in-group members more than out-group members and thus generally tend to favor in-groups over out-groups . . . . [W]ork group members are more positively inclined toward their group and the people within it if fellow group members are similar rather than dissimilar to the self. 56

This perspective further implies that similarity leads to liking and attraction, thereby fostering a host of positive outcomes. If this were the case, one would expect that the more homogeneous a work group, the higher the member commit- ment and group cohesion, and the lower the amount of interpersonal confl icts. There is a large body of research supporting propositions derived from the social categorization model. 57

For example, past research revealed that people who were different from their work units in racial or ethnic background were less psychologically committed to their organizations and less satisfi ed with their careers. 58 Additional studies showed that demographic diversity was associated with less cooperation among team members and more negative impressions toward people who were demo- graphically different. 59 Finally, recent studies demonstrated that demographic di- versity was associated with higher levels of employee depression, turnover, and deviance (i.e., exhibiting behavior that violates norms and threatens the well-being of the organization) and lower profi ts. 60 All told then, the social categorization model supports the idea that homogeneity is better than heterogeneity in terms of affecting work-related attitudes, behavior, and performance.

Information/Decision-Making Theory The second theoretical point of view, referred to as information/decision-making theory, arrives at opposite pre- dictions, proposing that diverse groups should outperform homogenous groups. The logic of this theory was described as follows:

Example. The idea is that diverse groups are more likely to possess a broader range of task-relevant knowledge, skills, and abilities that are distinct and nonredundant

LO.6

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Chapter Two Managing Diversity: Releasing Every Employee’s Potential 51

and to have different opinions and perspectives on the task at hand. This not only gives diverse groups a larger pool of resources, but may also have other benefi cial effects. 61

This perspective highlights three positive effects of diverse work groups. 62 First, diverse groups are expected to do a better job in earlier phases of problem solv- ing because they are more likely to use their diverse backgrounds to generate a more comprehensive view of a problem. For example, gender and ethnic diversity can help work teams to better understand the needs and perspectives of a mul- ticultural customer base. Second, the existence of diverse perspectives can help groups to brainstorm or uncover more novel alternatives during problem-solving activities. Finally, diversity can enhance the number of contacts a group or work unit has at its disposal. This broad network enables groups to gain access to new information and expertise, which results in more support for decisions than ho- mogenous groups. Research supports this theory of diversity.

Team performance was positively related to a team’s diversity in gender, eth- nicity, age, and education. 63 Heterogeneous groups also were found to produce better-quality decisions and demonstrated higher productivity than homogenous groups. 64 Preliminary research also supports the idea that workforce diversity pro- motes creativity and innovation. This occurs through the sharing of diverse ideas and perspectives. Rosabeth Moss-Kanter, a management expert, was one of the fi rst to investigate this relationship. Her results indicated that innovative compa- nies deliberately used heterogeneous teams to solve problems, and they employed more women and minorities than less innovative companies. She also noted that innovative companies did a better job of eliminating racism, sexism, and clas- sism. 65 A summary of 40 years of diversity research supported Moss-Kanter’s conclusion that diversity can promote creativity and improve a team’s decision making. 66

Reconciling the Effects of Diverse Work Environments Our pre- vious discussion about social categorization theory and information/decision- making theory revealed that there are both positive and negative effects associated with diversity. The model in Figure 2–3 summarizes the process underlying these effects. Consistent with social categorization theory, there is a negative relation- ship between the amount of diversity in a work group and the quality of interper- sonal processes and group dynamics within a work group (path A in Figure 2–3). This negative relationship ultimately results in negative outcomes because of the positive relationship between the quality of interpersonal processes and group dy- namics and outcomes (path C). For example, gender and racial diversity in a work group foster more interpersonal confl ict, which in turn results in lower job satisfac- tion, higher turnover, and lower productivity. Recent research shows that this type of negative pattern is more pronounced when groups have salient demographic fault-lines. 67 A demographic fault line is defi ned as “hypothetical dividing lines that may split a group into subgroups based on one or more attributes.” 68 Fault lines form when work-group members possess varying demographic characteristics (e.g., gender, age, ethnicity), and negative interpersonal processes occur when peo- ple align themselves based on salient fault lines or demographic characteristics.

In contrast, research regarding the information/decision-making theory tells us that the amount of diversity in a work group is positively associated with

social categorization theory Similarity leads to liking and attraction.

information/decision-making theory Diversity leads to better task-relevant processes and decision making.

demographic fault line A hypo- thetical dividing line that splits groups into demographically based subgroups.

Go to www.mcgrawhillconnect.com for a video case on Andre Thornton and how he deals with diversity issues in his business.

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52 Part One The World of Organizational Behavior

task-relevant processes and decision making (path B), which in turn fosters posi- tive outcomes (path D). Gender and racial diversity in this case lead to positive outcomes because they lead to improved task-related processes and decision mak- ing. Two studies further demonstrated that the positive effects of diversity were stronger when work groups were open-minded, more readily discussed and shared information, and displayed more integrative behavior. 69

Given that work-group diversity is associated with positive and negative out- comes, we need to consider what management can do to reduce the potential nega- tive effects of diversity. First, organizations can target training to improve the inherent negative relationship between a work group’s diversity and its interper- sonal processes and group dynamics (path A in Figure 2–3). For example, train- ing can be used to help employees understand demographic differences and to develop interpersonal skills that foster integrative and collaborative behavior. 70 This training might focus on confl ict management, interpersonal infl uence, giving feedback, communication, and valuing differences. Second, managers can seek ways to help employees ease the tensions of working in diverse groups. Such ef- forts might include the creation of support groups. Finally, steps could be taken to reduce the negative effects of unconscious stereotyping, which is discussed in Chapter 7, and increase the use of group goals in heterogeneous groups. Reward- ing groups to accomplish group goals might encourage group members to focus on their common objectives rather than on demographic fault lines that are unre- lated to performance.

Back to the Chapter-Opening Case

Based on the process model of diversity, what should management at the Arizona Department of Corrections do to reduce future incidents of sexual harassment?

A Process Model of Diversity

–(A )

+(D )+(B)

+(C) Interpersonal Processes

and Group Dynamics

Task-Relevent Processes and

Decision Making

Outcomes

Work attitudes Work behavior Performance

Dimensions of Diversity

Surface level • Age • Gender • Physical ability • Ethnicity • Race

Deep level • Value • Attitudes • Beliefs • Personality

fi gure 2–3 A Process Model of Diversity

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Chapter Two Managing Diversity: Releasing Every Employee’s Potential 53

Barriers and Challenges to Managing Diversity

We introduced this chapter by noting that diversity is a sensitive, potentially vola- tile, and sometimes uncomfortable issue. It is therefore not surprising that organi- zations encounter signifi cant barriers when trying to move forward with managing diversity. The following is a list of the most common barriers to implementing successful diversity programs: 71

1. Inaccurate stereotypes and prejudice. This barrier manifests itself in the belief that differences are viewed as weaknesses. In turn, this promotes the view that diversity hiring will mean sacrifi cing competence and quality.

2. Ethnocentrism. The ethnocentrism barrier represents the feeling that one’s cultural rules and norms are superior or more appropriate than the rules and norms of another culture. This barrier is thoroughly discussed in Chapter 4.

3. Poor career planning. This barrier is associated with the lack of opportunities for diverse employees to get the type of work assignments that qualify them for senior management positions.

4. A negative diversity climate. Climate is generally viewed as employee percep- tions about an organization’s formal and informal policies, practices, and procedures. Diversity climate is a subcomponent of an organization’s overall climate and is defi ned as the employees’ aggregate “perceptions about the organization’s diversity-related formal structure characteristics and informal values.” 72 Diversity climate is positive when employees view the organization as being fair to all types of employees; the concept of organizational fairness is discussed in Chapter 8. Recent research revealed that a positive diversity climate enhanced the positive effects of diversity while a negative diversity climate reduced the positive aspects of employee diversity. 73

5. An unsupportive and hostile working environment for diverse employees. Sex- ual, racial, and age harassment are common examples of hostile work envi- ronments. Whether perpetrated against women, men, older individuals, or LGBT people, hostile environments are demeaning, unethical, and appro- priately called “work environment pollution.” You certainly won’t get em- ployees’ best work if they believe that the work environment is hostile toward them. Remember, a hostile work environment is perceptual. This means that people have different perceptions of what entails “hostility.” The perception process is discussed in Chapter 7.

It also is important to note that harassment can take place via e-mail, texting, and other forms of social media. For example, a recent study of 220 employees revealed that the initial harassment began by e-mail or phone. 74 Managers are encouraged to treat electronic harassment the same as any other type of harassment.

6. Lack of political savvy on the part of diverse employees. Diverse employ- ees may not get promoted because they do not know how to “play the game” of getting along and getting ahead in an organization. Research reveals that women and people of color are excluded from organizational networks. 75

LO.7 TO THE POINT What are the most common barriers to implementing successful diversity programs?

diversity climate Employees’ aggregate perceptions about an organization’s policies, practices, and procedures pertaining to diversity.

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7. Diffi culty in balancing career and family issues. Women still assume the ma- jority of the responsibilities associated with raising children. This makes it harder for women to work evenings and weekends or to frequently travel once they have children. Even without children in the picture, household chores take more of a woman’s time than a man’s time.

8. Fears of reverse discrimination. Some employees believe that managing diversity is a smoke screen for reverse discrimination. This belief leads to very strong resistance because people feel that one person’s gain is another’s loss.

9. Diversity is not seen as an organizational priority. This leads to subtle resistance that shows up in the form of com- plaints and negative attitudes. Employees may complain about the time, energy, and resources devoted to diversity that could have been spent doing “real work.”

10. The need to revamp the organization’s performance ap- praisal and reward system. Performance appraisals and reward systems must reinforce the need to effectively man- age diversity. This means that success will be based on a new set of criteria. For example, General Electric evaluates the extent to which its managers are inclusive of employees with different backgrounds. These evaluations are used in salary and promotion decisions. 76

11. Resistance to change. Effectively managing diversity en- tails signifi cant organizational and personal change. As discussed in Chapter 18, people resist change for many different reasons.

In summary, managing diversity is a critical component of organizational success.

Back to the Chapter-Opening Case

Which barriers and challenges to managing diversity played a role in what happened to Michelle Barfi eld?

Organizational Practices Used to Effectively Manage Diversity

So what are organizations doing to effectively manage diversity? Answering this question requires that we provide a framework for categorizing organizational ini- tiatives. Researchers and practitioners have developed relevant frameworks. One was developed by R Roosevelt Thomas Jr, a diversity expert. He identifi ed eight generic action options that can be used to address any type of diversity issue. This section reviews Thomas’s framework in order to provide you with a broad under- standing about how organizations are effectively managing diversity.

R Roosevelt Thomas Jr’s Generic Action Options Thomas identifi ed eight basic responses for handling any diversity issue. After describing each action option, we discuss relationships among them. 77

Option 1: Include/Exclude This choice is an outgrowth of affi rmative action programs. Its primary goal is to either increase or decrease the number of

LO.8 TO THE POINT Why is fostering mutual adaptation the best action option for managing diversity?

This photo highights a diverse workforce at GE. The company is proud of its approach toward managing diversity.

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Chapter Two Managing Diversity: Releasing Every Employee’s Potential 55

diverse people at all levels of the organizations. Shoney’s restaurant represents a good example of a company that attempted to include diverse employees after settling a discrimination lawsuit. The company subsequently hired African Ameri- cans into positions of dining-room supervisors and vice presidents, added more franchises owned by African Americans, and purchased more goods and services from minority-owned companies. 78

Option 2: Deny People using this option deny that differences exist. Denial may manifest itself in proclamations that all decisions are color, gender, and age blind and that success is solely determined by merit and performance. Consider State Farm Insurance, for example. “Although it was traditional for male agents and their regional managers to hire male relatives, State Farm Insurance avoided change and denied any alleged effects in a nine-year gender-bias suit that the company lost.” 79

Option 3: Assimilate The basic premise behind this alternative is that all diverse people will learn to fi t in or become like the dominant group. It only takes time and reinforcement for people to see the light. Organizations initially assimi- late employees through their recruitment practices and the use of company orien- tation programs. New hires generally are put through orientation programs that aim to provide employees with the organization’s preferred values and a set of standard operating procedures. Employees then are encouraged to refer to the policies and procedures manual when they are confused about what to do in a specifi c situation. These practices create homogeneity among employees.

Option 4: Suppress Differences are squelched or discouraged when using this approach. This can be done by telling or reinforcing others to quit whining and complaining about issues. The old “you’ve got to pay your dues” line is an- other frequently used way to promote the status quo.

Option 5: Isolate This option maintains the current way of doing things by setting the diverse person off to the side. In this way the individual is unable to infl uence organizational change. Managers can isolate people by putting them on special projects. Entire work groups or departments are isolated by creating func- tionally independent entities, frequently referred to as “silos.” Shoney’s employees commented to a Wall Street Journal reporter about isolation practices formerly used by the company:

Example. White managers told of how Mr. Danner [previous chairman of the company] told them to fi re blacks if they became too numerous in restaurants in white neighborhoods; if they refused, they would lose their jobs, too. Some also said that when Mr. Danner was expected to visit their restaurant, they scheduled black employees off that day or, in one case, hid them in the bathroom. Others said blacks’ applications were coded and discarded. 80

Option 6: Tolerate Toleration entails acknowledging differences but not valuing or accepting them. It represents a live-and-let-live approach that super- fi cially allows organizations to give lip service to the issue of managing diversity. Toleration is different from isolation in that it allows for the inclusion of diverse people. However, differences are not really valued or accepted when an organiza- tion uses this option.

Option 7: Build Relationships This approach is based on the premise that good relationships can overcome differences. It addresses diversity by fostering quality relationships—characterized by acceptance and understanding—among

Go to www.mcgrawhillconnect.com for an interactive exercise to test your knowledge of Thomas’s generic action options.

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56 Part One The World of Organizational Behavior

diverse groups. Rockwell Collins, a producer of aviation electronics in Cedar Rap- ids, Iowa, is a good example of a company attempting to use this diversity option. Rockwell is motivated to pursue this option because it has a shortage of qualifi ed employees in a state that is about 6% nonwhite. To attract minority candidates the company “is building closer relationships with schools that have strong engi- neering programs as well as sizable minority populations. It also is working more closely with minority-focused professional societies.” 81 The city of Cedar Rapids is also getting involved in the effort by trying to offer more cultural activities and ethnic-food stores that cater to a more diverse population base.

Option 8: Foster Mutual Adaptation In this option, people are willing to adapt or change their views for the sake of creating positive relationships with others. This implies that employees and management alike must be willing to ac- cept differences and, most important, agree that everyone and everything is open for change. Lois Quam’s experience at UnitedHealthcare is a good example of mutual adaptation (see Real World/Real People above).

Conclusions about Action Options Although the action options can be used alone or in combination, some are clearly better than others. Exclusion, denial, assimilation, suppression, isolation, and toleration are among the least preferred options. Inclusion, building relationships, and mutual adaptation are the preferred strategies. That said, Thomas reminds us that mutual adaptation is the only approach that unquestionably endorses the philosophy behind managing diversity. In closing this discussion, it is important to note that choosing how to best manage diversity is a dynamic process that is determined by the context at hand. For instance, some organizations are not ready for mutual adaptation. The best one might hope for in this case is the inclusion of diverse people.

Summary of Key Concepts 1. Defi ne diversity and review the four layers of diversity.

Diversity represents the individual differences that make people different from and similar to each other. Diversity pertains to everybody. It is not simply an issue of age, race, gender, or sexual orientation. The layers of diversity defi ne an individual’s personal identity and constitute a perceptual fi lter that infl uences how we interpret the

world. Personality is at the center of the diversity wheel. The second layer of diversity consists of a set of internal dimensions that are referred to as surface-level dimensions of diversity. The third layer is composed of external infl uences and is called secondary dimensions of diversity. The fi nal layer of diversity includes organizational dimensions.

Shortly after she’d [Lois Quam] had twins Will and Steve, Quam was offered another high-profi le opportunity. Her boss wanted her to run UnitedHealthcare’s public-sector services division. . . . “It was so overwhelming with twins. You can’t pretend it doesn’t make a difference. So I said, ‘I’d really like to do this, but my primary focus for this period of my life is my sons.’” She remembers thinking, “This is going badly! It isn’t strategic to be so blunt.” But her boss surprised her. “He said, ‘It’s not a job that pays by the hour. You do it in a way that works for you, and if it doesn’t work for me, I’ll tell you.’”

Looking back, Quam describes her reaction as an “amazing gift” . . . because it affi rmed her instincts about the best way to balance career and family.

How does this example illustrate mutual adap tation?

SOURCE: A Beard, “Surviving Twin Challenges—At Home and Work,” Harvard Business Review, January–February 2011, p 164.

real WORLD // real PEOPLE UnitedHealthcare Fosters Mutual Adaptation

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Chapter Two Managing Diversity: Releasing Every Employee’s Potential 57

2. Explain the difference between affi rmative action and managing diversity. Affi rmative action is an outgrowth of equal employment opportunity legislation and is an artifi cial intervention aimed at giving management a chance to correct past discrimination. Managing diver- sity entails creating a host of organizational changes that enable all people to perform up to their maximum potential.

3. Explain why Alice Eagly and Linda Carli believe that a woman’s career is best viewed as traveling through a laby- rinth. Eagly and Carli believe that women were barred from achieving high-level managerial positions in the past, but that women now have busted through these barriers. Eagly and Carli propose that women have made these strides by successfully navigating a labyrinth of twists, turns, and obstacles.

4. Review the demographic trends pertaining to racial groups, educational mismatches, and an aging workforce. With re- spect to racial groups, Asians and Hispanics are expected to have the largest growth in the population between 2000 and 2050, and minority groups will constitute 49.9% of the population in 2050. Minority groups also are ex- periencing a glass ceiling. There is a mismatch between workers’ educational attainment and occupational re- quirements. The workforce is aging.

5. Highlight the managerial implications of increasing diver- sity in the workforce. There are seven broad managerial implications: ( a ) To attract the best workers, companies need to adopt policies and programs that meet the needs of all employees; ( b ) companies can help women and people of color enhance their promotability by help- ing them fi nd mentors and sponsors; (c) companies should educate employees about negative stereotyping, particularly when it comes to selecting and promoting leaders; (d ) companies should consider using progres- sive methods to recruit, retain, and integrate Hispanic workers into organizations; (e) there will be a shortage of qualifi ed people in technical fi elds and on-the-job remedial skills, and literacy training will be needed to help the number of high-school dropouts and illiterates

cope with job demands; ( f ) organizations will need to provide tangible support to school systems if the United States is to remain globally competitive; and ( g ) there are three broad recommendations for managing an aging workforce.

6. Describe the positive and negative effects of diversity by using social categorization theory and information/ decision-making theory . Social categorization theory implies that similarity leads to liking and attraction, thereby fostering a host of positive outcomes. This theory supports the idea that homogeneity is better than hetero- geneity because diversity causes negative interpersonal processes and group dynamics. The information/decision- making theory is based on the notion that diverse groups should outperform homogenous groups because diversity is positively associated with task-relevant processes and decision making.

7. Identify the barriers and challenges to managing diver- sity. There are 10 barriers to successfully implement- ing diversity initiatives: ( a ) inaccurate stereotypes and prejudice, ( b ) ethnocentrism, ( c ) poor career planning, ( d ) an unsupportive and hostile working environment for diverse employees, ( e ) lack of political savvy on the part of diverse employees, ( f ) diffi culty in balancing career and family issues, ( g ) fears of reverse discrimi- nation, ( h ) diversity is not seen as an organizational priority, ( i ) the need to revamp the organization’s per- formance appraisal and reward system, and ( j ) resis- tance to change.

8. Discuss the organizational practices used to effectively man- age diversity as identifi ed by R Roosevelt Thomas Jr. There are many different practices organizations can use to manage diversity. R Roosevelt Thomas Jr identifi ed eight basic responses for handling any diversity issue: include/ exclude, deny, assimilate, suppress, isolate, tolerate, build relationships, and foster mutual adaptation. Exclusion, denial, assimilation, suppression, isolation, and toleration are among the least preferred options. Inclusion, building relationships, and mutual adaptation are the preferred strategies.

Key Terms Sexual harassment, 34

Diversity, 34

Discrimination, 36

Affi rmative action, 36

Managing diversity, 37

Workforce demographics, 39

Glass ceiling, 39

Social categorization theory, 50

Information/decision-making theory, 50

Demographic fault line, 51

Diversity climate, 53

LeasePlan Effectively Manages Diversity 82

Shortly after joining LeasePlan USA as its head of sales and marketing in 2003, Mike Pitcher met with representatives

of the vehicle-leasing company’s top customers. To his sur- prise, most were women.

OB in Action Case Study

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This case takes place in Michigan, a state that allows the use of medical marijuana.

Joseph Casias, a 30-year-old father of two, began work in 2004 as an entry-level grocery stocker at the Wal- mart in Battle Creek, Mich. By 2008, he had progressed to inventory control manager and was recognized as Associate of the Year, an honor given to only 2 of 400 employees.

In November 2009, Casias twisted his knee at work; be- cause Walmart policy requires drug testing after a work- place injury, he underwent a urine test. Before the test, he showed the testing staff a registry card stating that he was a medical marijuana patient under Michigan law. He explained that he had been diagnosed with inoperable

brain cancer at age 17, and the marijuana, prescribed by his oncologist, helped alleviate daily pain.

When the drug test revealed marijuana metabolites in Casias’s system, the store manager told him that Walmart would not honor his registry card—and Casias was terminated.

What would you do if you were an executive at Walmart? 1. Give Casias his job back. He is a great employee and is

not violating state law about using marijuana for medi- cal conditions.

Should Joseph Casias Be Fired by Walmart? 83

Legal/Ethical Challenge

Women also outnumbered men among LeasePlan’s 450 employees. Yet the vast majority of top managers at the company, a subsidiary of Netherlands-based Lease- Plan Corp., were men.

Soon after, LeasePlan began an effort to transform its corporate culture—rooted in the old-boy network of fl eet managers—and promote more women. Executives hired a consultant to offer women career counseling, revised the company’s pay plan to stress performance over longevity, and displaced some longtime managers. Today, three of the eight top executives are women, up from one in seven two years ago.

Women employees say LeasePlan is a more support- ive and collaborative employer. Mr. Pitcher, now the company’s chief executive, calls the initiative a strategic investment rather than the “the politically correct thing to do.”

“LeasePlan doesn’t build anything,” he says. “Our sus- tainable competitive advantage is our people.”

Such efforts require sustained commitment at the top, says Sheila Wellington, clinical professor of management at New York University’s Stern School of Business. Execu- tives “need to make it very clear that this isn’t the fl avor of the month,” says Ms. Wellington, a former president of Catalyst, a research fi rm for focusing on women’s work- place issues.

Ms. Wellington says executives must hold middle man- agers accountable for supporting and promoting female subordinates, particularly at smaller companies. . . .

LeasePlan executives launched their initiative in 2006. They hired Pathbuilders, Inc., an Atlanta human-resources consultancy that focuses on women, to craft a program that includes a skills assessment, career guidance, and tips on communicating and building a “brand.” The program, which taps about 30 women each year, also features net- working events and a panel discussion with female execu- tives from other fi rms.

The broader effort to transform the corporate culture distinguishes LeasePlan from other companies trying to

promote women, says Maria Goldsholl, chief operating offi cer of Mom Corps, a staffi ng company specializing in fl exible employment for women . . . .

The program also appears to be boosting job sat- isfaction and engagement among LeasePlan’s women employees. In a 2006 survey, 35% of women agreed the “management supports my efforts to manage my career.” The following year, 47% of all female employees and 71% of program participants agreed. The percentage of women who said they think positions at LeasePlan are awarded fairly increased to 30% from 22%.

Gerri Patton, director of client activation, says the pro- gram helped her become more confi dent and outspoken. The 23-year LeasePlan veteran encourages her female sub- ordinates to apply. “I wish I would have done that program 10 or 15 years ago,” she says. “There’s no telling where I would be . . . The sky would have been the limit.

SOURCE: Excerpted from C Tuna, “Initiative Moves Women Up Cor- porate Ladder,” The Wall Street Journal , October 20, 2008, p B4. Copyright © 2008 by Dow Jones & Company. Reproduced with per- mission of Dow Jones & Company via Copyright Clearance Center.

Questions for Discussion 1. What is the business case that is driving LeasePlan’s

interest in managing diversity? Discuss. 2. Compare and contrast the extent to which LeasePlan is

using principles from affi rmative action and managing diversity. Explain your rationale.

3. To what extent are LeasePlan’s efforts consistent with recommendations derived from Alice Eagly and Linda Carli? Discuss.

4. Which of R Roosevelt Thomas Jr’s eight generic diver- sity options is LeasePlan using to manage diversity? Explain.

5. While LeasePlan’s diversity initiative is clearly working, what recommendations would you make for improving their program? Explain.

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Chapter Two Managing Diversity: Releasing Every Employee’s Potential 59

For study material and exercises that apply to this chapter, visit our website, www.mhhe.com/kreitner10e

Web Resources

2. Zero tolerance should be applied and he should be fi red. Regardless of what state law says, it is illegal under federal laws to use marijuana. Standards for marijuana should be the same as any other drug.

3. He should be fi red because he presents a safety hazard to himself and others. The company must protect all employees from people who use drugs.

4. Invent other options. Discuss.

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