OBB Main Teaching Edited 2016

Chapter one: introduction to OB
In this chapter, we will address the definition of organizational behavior, the historical
perspectives of organizational behavior, the interdisciplinary influences on organizational
behavior, and a model of an organizational context within which a behavior occurs.
1.1 Definitions of Concepts of OB
The term, ‘Organizational Behavior’ is composed of two words ‘organization’ and ‘Behavior’
What are organizations?

Organizations are as old as the human race. Archaeologists have discovered massive templates
dating back to 3500 B.C. that were constructed through the organized actions of many people.
The fact that these impressive monuments were built suggests not only that complex
organizations existed, but that the people in them cooperated reasonably well. We have equally
impressive examples of contemporary organizations; from simple constructs to the complex
network of computer connections we call the internet. Now we can define the term organization
as two or more individuals who are interacting with each other within a deliberately structured
set up and working in an interdependent way to achieve some common objective/s. organizations
are not buildings or other physical structures. Rather organizations are people who work together
to achieve a set of goals. Organizations play a major role in our lives. We possibly cannot think
of a single moment in our lives when we are not depending on organizations in some form or the
other. Right from the public transport that you use to come to your institute, the institute itself,
the class you are attending at this moment, are all examples of organizations.
What is Behavior?
An organization comprises people with different attitudes, cultures, beliefs, norms and values.
Organizational behavior (often abbreviated as OB) is a field of study that investigates the
impact that individuals, groups, and structure have on behavior within organizations for the
purpose of applying such knowledge toward improving an organization’s effectiveness. That’s a
lot of words, so let’s break it down.
Organizational behavior is a field of study. This means that it is a distinct area of expertise with
a common body of knowledge. By saying that OB is a field of study, we mean that scholars have
been accumulating a distinct knowledge about behavior within organizations. What does OB
study?
OB studies three determinants of behavior in organizations: individuals, groups, and structure. In

addition, OB applies the knowledge gained about individuals, groups, and the effect of structure
on behavior in order to make organizations work more effectively.
To sum up the above definition, OB is concerned with the study of what people do in an
organization and how that behavior affects the performance of the organization.
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1.2 Why study OB?
Aside from the diploma or degree requirements, why should you or anyone else study OB? The
main reason for studying organizational behavior is that most of us work in organizations, so we
need to understand, predict and influence the behavior of others in organizational settings.
Marketing students learn marketing concepts and computer science students learn about circuitry
and software code. But everyone needs organizational behavior knowledge to address the people
issues that we face when trying to apply marketing, computer science and other ideas.
The study of OB can provide important insights into helping you better understand a work world
of continual change, how to overcome resistance to change, and how best to create an
organizational culture that thrives on change.
1.3 Complementing Intuition with Systematic Study
People develop intuitive understandings of the behaviors of other people through experience. This
experiential, common sense method of learning human behavior can often lead to erroneous
predictions.
Managers can improve their predictive ability by systematically coupling their individual
experiences with those of others. The best way to do this is through the study of organizational
behavior.
The important thing to remember is that human behavior is not random. Rather, OB has shown
that there are “fundamental consistencies [that] underlie the behavior of all individuals, and these
fundamental consistencies can be identified and then modified to reflect individual differences.”
Systematic study of behavior means: examining relationships, attempting to attribute causes

and effects, and basing our conclusions on scientific evidence- that is, on data gathered under
controlled conditions and measured and interpreted in a reasonably rigorous manner.
Intuition: your “gut feelings” about “what makes others tick.”
Our goal is to teach you how to use the systematic study of OB to enhance your intuitive
understanding of behavior and improve your accuracy in explaining and predicting behavior in
the workplace.

1.4 Interdisciplinary Influences: Disciplines contributing to the field of OB
Organization behavior is an applied behavioral science that is built upon contributions from a
number of behavioral disciplines. The predominant areas are psychology, sociology, social
psychology, anthropology, and political science.
Psychology
Psychology is the science that seeks to measure, explain, and sometimes change the behavior of
humans and other animals. Psychologists concern themselves with studying and attempting to
understand individual behavior. Those who have contributed and continue to add to the
knowledge of OB are learning theorists, personality theorists, counseling psychologists, and,
most important, industrial and organization psychologists.
Sociology
Whereas psychologists focus their attention on the individual, sociologists study the social
system in which individuals’ fulfill their roles; that is, sociology studies people in relation to
their fellow human beings. Specifically, sociologists have made their greatest contribution to OB
through their study of group behavior in organizations, particularly formal and complex
organizations. Some of the areas within OB that have received valuable input from sociologists
are group dynamics, design of work teams, organizational culture, formal organization culture,
formal organization theory and structure, organizational technology, communications, power,
and conflict.
Social psychology
Social psychology is an area within psychology, blending concepts from both psychology and
sociology. It focuses on the influence of people on one another. One of the major areas receiving
considerable investigation from social psychologists has been change-how to implement it and
how to reduce barriers to its acceptance. Additionally, we find social psychologists making
significant contributions in the areas of measuring, understanding, and changing attitudes;
communication patterns; the ways in which group activities can satisfy individual needs; and
group decision-making processes.

Behavioral Contribution Unit of
Output
Science Analysis
Learning
Motivation
Personality
Emotions
Perception
Training
Leadership effectives
Job satisfaction
Individual decision making
Psychology
Performance appraisal
Attitude measurement
Employee selection
Work design
Work stress Individual
Group dynamics
Work teams
Communication
Power
Conflict
Inergroup behavior
Formal organization Group

Organizational technology
Sociology Organization change
Organizational culture Study of
organization
behavior
Behavioral change
Attitude change
Communication
Group processes
Group decision making
Social psychology
Comparative values
Comparative attitudes Organization
Cross-cultural analysis system
Anthropology
Organizational culture
Organizational environment
Political science Conflict

Intraorganizational politics
Figure 1.1: Behavioral Fields Contributing to OB
Anthropology
Anthropology is the study of societies to learn about human beings and their activities.
Anthropologists’ work on cultures and environments, for instance, has helped us understand
differences in fundamental values, attitudes, and behavior among people in different counties and
within different organization. Much of our current understanding of organizational culture,
organizational environments, and difference among national cultures is the result of the work of
anthropologists or those using their methodologies.
Political Science
Although frequently overlooked, the contributions of political scientists are significant to the
understanding of behavior in organizations. Political science studies the behavior of individuals
and grounds within a political environment. Specific topics of concern here include structuring of
conflict, allocation of power, and how people manipulate power for individual self- interest.
Other disciplines contributing to the field of OB
Engineering
Engineering is the applied science of energy and matter. Engineering has made important
contributions to our understanding of the design of work. By taking basic engineering ideas and
applying them to human behavior in work organizations, Frederick Taylor had a profound
influence on the early years of the study of organization behavior. Taylor’s engineering
background led him to place special emphasis on human productivity and efficiency in work
behavior.
Management
Management originally called administrative science is a discipline concerned with the study of
overseeing activities and supervising people in organizations. It emphasizes the design,
implementation, and management of various administrative and organizational systems. March
and Simon take the human organization as their point of departure and concern themselves with
the administrative practices that will enhance the effectiveness of the system. Management is the
first discipline to take the modern corporation as the unit of analysis, and this viewpoint
distinguishes the discipline’s contribution to the study of organizational behavior.
Medicine
Medicine is the applied science of healing or treatment of diseases to enhance an individual’s
health and well being. Medicine embraces concern for both physical and psychological health,
with the concern for industrial mental health dating back at least sixty years. More recently, as
the war against acute disease in being won, medical attention has shifted from the acute diseases,
such as influenza, to the more chronic, such as hypertension. Individual behavior and lifestyle
patterns play a more important role in treating chronic diseases than in treating acute diseases.
The surge in health care costs through the past two decades has increased organizational concern
with medicine and health care in the workplace.
1.5 Challenges and Opportunities for OB
An understanding organizational behavior has never been more important for managers. A quick
look at a few of the dramatic changes now taking place in organizations supports this claim. For
instance, the typical employee is getting older; more and the heavy use of temporary workers are
severing the bonds of loyalty that historically tied many employees to their employers; and
global competition is requiring employees to become more flexible and to learn to cope with
rapid change.
In short, there are a lot of challenges and opportunities today for managers to use OB concepts.
In this section, we review some of the more critical issues confronting managers for which OB
offers solutions-or at least some meaningful insight toward solutions.
Responding to Globalization
Within at least last the decade one might observe many multinational companies and foreign
investors coming to our country? How do you think should managers respond to such
globalization instances?
Organizations are no longer constrained by national borders. For instance, Burger king is owned
by a British firm, and McDonald’s sells hamburgers in Moscow. Exxon, a so-called American
company, receives almost 75 percent of its revenues from sales outside the United States. Toyota
makes cars in Kentucky; General Motors makes cars in Brazil; and Ford (which owns part of
Mazda) transfers executives from Detroit to Japan to help Mazda manage its operations. These
examples illustrate that the world has become a global village. In turn, managers have to become
capable of working with people from different cultures.
Managing Workforce Diversity

One of the most important and broad-based challenges currently facing organizations is adapting
to people who are different. The term used describing this challenge is workforce diversity.
Whereas globalization focuses on differences among people from different countries, workforce
diversity addresses differences among people within given countries.
Workforce diversity means that organizations are becoming more heterogeneous in terms of
gender, race, and ethnicity.
Improving Quality and Productivity

Managers are confronting the challenges of quality. They have to improve their organization’s
productivity and the quality of the products and services they offer. Toward the goal of
improving quality and productivity, they are implementing programs such as total quality
management and reengineering-programs that require extensive employee involvement.
Total quality management (TQM) is a philosophy of management that is driven by the

constant attainment of customer satisfaction through the continuous improvement of all
organizational processes. TQM has implications for OB because it requires employees to rethink
what they do and become more involved in workplace decisions.
Improving People Skills
You recognize that people skills are important to managerial effectiveness. As you proceed
through this material, we’ll present relevant concepts and theories that can help you explain and
predict the behavior of people at work. In addition, you’ll also gain insights into specific people
skills that you can use on the job. For instance, you’ll learn a variety of ways to motivate people,
and how to create more effective teams.
Empowering People
If you pick up any popular business periodical nowadays, you will read about the reshaping of
the relationship between managers and those they are supposedly responsible for managing.
Stimulating Innovation and Coping with changes

Managers have always been concerned with change. What’s different nowadays is the length of
time between changes. It is used to be that managers needed to introduce major change programs
once or twice a decade. Today, change is an ongoing activity for most managers. The concept of
continuous improvement, for instance implies, constant change.
An organization’s employees can be the impetus for innovation and change or they can be a
major stumbling block. The challenge for managers is to stimulate employee creativity and
tolerance for change. The field of OB provides a wealth of ideas and techniques to aid in
realizing these goals.
Improving Ethical Behavior
You know ethical behavior is the concern of all organizations of the day. Specifically, in an
organizational world characterized by cutbacks, expectations of increasing worker productivity,
and tough competition in the marketplace, it is not altogether surprising that many employees
feel pressured to cut corners, break rules, and engage in other forms of questionable practices.
1.6 Historical Development

By most estimates, OB emerged as a distinct field around 1940s. However, its origins can be
traced much further back in time. Plato, the Greek Philosopher, wrote about equity in work
relationships. Another Greek philosopher, Aristotle, spoke about the elements of persuasive
communication. The writings of the 16-th century Italian philosopher Niccolo Machiavelli laid
the foundation for contemporary work on organizational power and politics. In 1776, Adam
Smith advocated a new form of organizational structure based on the division of labor. One
hundred years later, German Sociologist, Max Weber wrote about rational organizations and
initiated discussions of charismatic leadership. Soon after, Frederick Winslow Taylor introduced
the systematic use of goal setting and rewards to motivate employees. In the 1920s, productivity
studies at Western Electric’s Hawthorne plant reported that an informal organization –employees
usually interacting with each other operates alongside the formal organization. Dear student! So
you can see that OB ideas have been around for a long time; they just weren’t organized into a
unified discipline until after World War II.
1.7 Scope of Organizational Behavior
There is an increasing agreement as to the components or topics that constitute the subject area
of OB. Although there is still considerable debate as to the relative importance of each, there
appears to be general agreement that OB includes the core topics of structure and processes,
learning, attitude development and perception, change processes, conflict, work design, and work
stress.
The study of Organizational Behavior facilitates the process of explaining, understanding,

predicting, maintaining, and changing employee behavior in an organizational setting. The
value of organizational behavior is that it isolates important aspects of the manager’s job and
offers specific perspective on the human side of management:
 people as organizations,
 people as resources, and
 People as people.
In other words, it involves the understanding, prediction and control of human behavior and
factors affecting their performance and interaction among the organizational members. And
because organizational behavior is concerned specifically with employment – related situations,
you should not be surprised to find that it emphasizes behavior as related to concerns such as
jobs, work, absenteeism, employment turnover, productivity, human performance and
management.

1.8 The Organizational System
A complete understanding of organizational behavior requires both an understanding of human

behavior and an understanding of the organizational context within which human behavior is
acted out. The organizational context is the specific setting within which organizational behavior
is enacted. This section discusses several aspects of this organizational context and includes
specific organizational examples. First, organizations are presented as systems. Second, the
formal and informal organization is discussed.
Organizations as Systems
In the earlier section we have defined what an organization is all about. Do remember. But does
it mean by an organizational system? You know that organizations are systems of interacting
components, which are people, task, technology, and structure. These internal components also
interact with components in the organization’s environment. Organizations as open system have
people, technology, structure, and purpose, which interact with element in the organization’s
environment.
Open and Closed Systems
A system is commonly defined as a group of interacting units or elements that have a common
purpose and a subsystem is a set of related parts that work together to achieve an objective as
one component of a larger system. The units or elements of a system can be cogs, wires, people,
computers, and so on. Systems are generally classified as open systems and closed systems and
they can take the form of mechanical, biological, or social systems. Open systems refer to
systems that interact with other systems or the outside environment, whereas closed systems
refer to systems having relatively little interaction with other systems or the outside
environment. For example, living organisms are considered open systems because they take in
substances from their environment such as food and air and return other substances to their
environment. Humans, for example, inhale oxygen out of the environment and exhale carbon
dioxide into the environment. Similarly, some organizations consume raw materials in the
production of products and emit finished goods and pollution as a result. In contrast, a watch is
an example of a closed system in that it is a relatively self-contained, self-maintaining unit that
has little interacts or exchange with its environment.
All systems have boundaries, a fact that is immediately apparent in mechanical systems such as
the watch, but much less apparent in social systems such as organizations. The boundaries of
open systems, because they interact with other systems or environments, are more flexible than
those of closed systems, which are rigid and largely impenetrable. A closed-system perspective
views organizations as relatively independent of environmental influences. The closed-system

approach conceives of the organization as a system of management, technology, personnel,
equipment, and materials, but tends to exclude competitors, suppliers, distributors, and
governmental regulators. This approach allows managers and organizational theorists to analyze
problems by examining the internal structure of a business with little consideration of the
external environment. The closed-system perspective basically views an organization much as a
thermostat; limited environmental input outside of changes in temperature is required for
effective operation.
Open-systems theory originated in the natural sciences and subsequently spread to fields as
diverse as computer science, ecology, engineering, management, and psychotherapy. In contrast
to closed-systems, the open-system perspective views an organization as an entity that takes
inputs from the environment, transforms them, and releases them as outputs in tandem with
reciprocal effects on the organization itself along with the environment in which the organization
operates.
Furthermore, the open-system approach serves as a model of business activity; that is, business
as a process of transforming inputs to outputs while realizing that inputs are taken from the
external environment and outputs are placed into this same environment. Companies use inputs
such as labor, funds, equipment, and materials to produce goods or to provide services and they
design their subsystems to attain these goals. These subsystems are thus analogous to cells in the
body, the organization itself is analogous to the body and external market and regulatory
conditions are analogous to environmental factors such as the quality of housing, drinking water,
air and availability of nourishment.
The systems view approach to management views the elements of an organization as

interconnect and linked to its environment. Organizational effectiveness, even survival, depends
on the organization’s interaction with its environment. The schematic model for systems is
indicated in Figure 1.2.
INPUTS TRANSFORMATION OUTPUTS

Material Organizational Environmental
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Capital Variables Variables Services
Human
Profits
Resource  Methods Economic conditions Education
Energy  Processes Competitor’s action Energy
Man
agem
ent
kno
w
how
and
tech
Fee nolo
dbac gy
k trans
form
input
s into
outp
Figure 1.2: Schematic Model of Systems
1.9 The Formal and Informal Organization
In the previous section, we examined some types of formal organization structures and discussed
their potential impact upon employee behavior. In addition to the formal structure as set out in
the organization chart, there exists another “structure” which is also important in determining
employee behavior. This structure is called the informal organization and it refers to the patterns
of behavior and influence that arise out of the human interaction occurring within the formal
structure.
Formal organization (overt)

Goals and objectives, Policies and
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Job descriptions
Financial resources
Informal organization (covert)
Beliefs and assumptions about:
 People
 Work the organization
Perceptions and attitudes
Values
Feelings, such as fear, range, despair and hope
Group norms
Figure 1.3. Formal and Informal Elements of Organizations
While formal and informal organizations are similar along some dimensions, there are also
important differences. Because the informal organization can exert a strong influence on
employee behavior, it is important to understand its nature, how it works, in what ways it affects
behavior, and how it can be used in the management of organization.
Examples of behavior in the informal organization are many and varied:

1. A production worker may restrict output to conform to the norm of the work group.
2. Management may plan an important announcement for employees, only to find out that the
message was leaked earlier through the grapevine.
3. The manager of a department may find that the leader of the company baseball team appears
to exert more influence during the baseball season than the line managers.
4. A potentially conflict-laden meeting may proceed very rationally since most of the
disagreements on issues were worked out the night before over a few drinks.

Chapter 2
Foundation of Individual Behavior and Learning in an Organization
2.1 Definitions of Individual Behavior
Individual differences refers to the way in which factors such as abilities, personalities,
perceptions, attitudes, values, and ethics differ from one individual to another. Figure 2.1.,
depicts a model of individual differences in behavior.
The basis for understanding individual differences stems from Lewin’s early contention that
behavior is a function of the person and the environment. Lewin expressed this idea in an
equation: B = f (P, E), where B = behavior, P = Person and E = environment. This idea has
been developed by the interactional psychology approach. Basically, this approach says that in
order to understand behavior; we must know something about the person and something about
the situation. There are four basic propositions of international psychology. These are discussed
below:
1. Behavior is a function of a continuous, multidirectional interaction between the person and
the situation.
2. The person is active in this process and both is changed by situations and changes situations.
3. People vary in many characteristics, including cognitive, affective, motivational, and ability
factors.
4. Two interpretations of situations are important: the objective situation and the person’s
subjective view of the situation.
The person The environment

Skills and abilities Organization
Personality Work group
Perception Job
Attribution Personal life
Attitudes
Values
Ethics

Behavior
Figure 2.1 Variables Influencing Individual Behavior
The interactional psychology approach points out the need to study both persons and situations.
We will focus on personal and situational factors throughout this module. The person consists of
individual differences such as personality, perception, attitudes, values, and ethics. The situation
consists of the environment, the personal life situation, job characteristics, and many other
environmental influences.
2.2 Individual behavior affecting elements
2.2.1. Perception
Perception involves the way we view the world around us. It adds meaning to information
gathered via the five senses of touch, smell, hearing, vision, and taste. Perception is the primary
vehicle through which we come to understand ourselves and our surroundings.
What is social perception? Social perception is the process of interpreting information about
another person. Virtually all management activities rely on perception. In appraising
performance, managers use their perceptions of an employee's behavior as a basis for the
evaluation.
Perception is also culturally determined. Based on our cultural backgrounds, we tend to perceive
things in certain ways.
Culture affects our interpretation of the data we gather, as well as the way we add meaning to it.
Valuing diversity, including cultural diversity, has been recognized as the key to international
competitiveness. This challenge and others make social perception skills essential to managerial
success.
Factors Affecting Perception
What factors influence perception? Three major categories of factors influence our perception of
another person: characteristics of ourselves, as perceivers; characteristics of the target person we
perceive; and characteristics of the situation in which the interaction takes place. Figure 2.2
shows a model of social perception.
1. Characteristics of the Perceiver

Familiarity: Several characteristics of the perceiver can affect social perception. One such
characteristic is familiarity with the target (the person being perceived). When we are familiar
with a person, we have multiple observations upon which to base our impression of him or her. If

the information we have gathered during these observations is accurate, we may have an accurate
perception of the other person. Familiarity does not always mean accuracy, however. Sometimes,
when we know a person well, we tend to screen out information that is inconsistent with what we
believe the person is like. This is a particular danger in performance appraisals where the rater is
familiar with the person being rated.
Attitudes: The perceiver's attitudes also affect social perception. Suppose you are interviewing
candidates for a very important position in your organization-a position that requires negotiating
contracts with suppliers, most of whom are male. You may feel that women are not capable of
holding their own in tough negotiations. This attitude will doubtlessly affect your perceptions of
the female candidates you interview.
Mood: Mood can have a strong influence on the way we perceive someone. We think differently
when we are happy than we do when we are depressed. In addition, we remember information
that is consistent with our mood state better than information that is inconsistent with our mood
state. When in a positive mood, we form more positive impressions of others. When in a
negative mood, we tend to evaluate others unfavorably.
Characteristics of the perceiver Characteristics of the target

 Familiarity with target  Physical appearance
 Attitudes  Verbal communication
 Mood  Nonverbal cues
 Self-concept  Intentions
 Cognitive structure
Barriers
 Selective Perception Social
Perception
 Stereotyping
 First Impression error
 Implicit Personality Theory
 Self fulfilling Prophecies
Characteristics of the situation
 Context of the interaction
 Strength of situational
cues

Figure 2.2 Model of Social Perception
Self-concept: Another factor that can affect social perception is the perceiver's self-concept. An
individual with a positive self-concept tends to notice positive attributes in another person. In
contrast, a negative self-concept can lead a perceiver to pick out negative traits in another person.
Greater understanding of self allows us to have more accurate perceptions of others.
Cognitive structure: Cognitive structure, an individual's pattern of thinking, also affects social
perception. Some people have a tendency to perceive physical traits, such as height, weight, and
appearance, more readily. Others tend to focus more on central traits, or personality dispositions.
Cognitive complexity allows a person to perceive multiple characteristics of another person
rather than attending to just a few traits.
2. Characteristics of the Target
Characteristics of the target, who is the person being perceived, influence social perception. The
following are some of the typical characteristics of the target:
Physical appearance
Physical appearance plays a big role in our perception of others. The perceiver will notice the
target's physical features like height, weight, estimated age, race, and gender. Clothing says a
great deal about a person. Blue pin-striped suits, for example, are decoded to mean banking or
Wall Street. Perceivers tend to notice physical appearance characteristics that contrast with the
norm, that are intense, or that are new or unusual. A loud person, one who dresses outlandishly, a
very tall person, or a hyperactive child will be noticed because he or she provides a contrast to
what is commonly encountered.
Verbal and Non-verbal communication:

Verbal communication from targets also affects our perception of them. We listen to the topics
they speak about, their voice tone, and their accent and make judgments based on this input.
Nonverbal communication conveys a great deal of information about the target. Eye contact,
facial expressions, body movements, and posture all are deciphered by the perceiver in an
attempt to form an impression of the target.
Intentions: The intentions of the target are inferred by the perceiver, who observes the target's
behavior. We may see our boss appear in our office doorway and think, "Oh no! She's going to
give me more work to do." Or we may perceive that her intention is to congratulate us on a
recent success. In any case, the perceiver's interpretation of the target's intentions affects the way
the perceiver views the target.

3. Characteristics of the Situation
The situation in which the interaction between the perceiver and the target takes place has an
influence on the perceiver's impression of the target.
Social context: The social context of the interaction is a major influence. Meeting a professor in
his or her office affects your impression in a certain way that may contrast with the impres sion
you would form had you met the professor in a local restaurant. In Japan, social context is very
important. Business conversations after working hours or at lunch are taboo. If you try to talk
business during these times, you may be perceived as rude.
Strength of situational cues: The strength of situational cues also affects social perception. As
we discussed earlier in the chapter, some situations provide strong cues as to appropriate
behavior. In these situations, we assume that the individual's behavior can be accounted for by
the situation, and that it may not reflect the individual's disposition. This is the discounting
principle in social perception. For example, you may encounter an automobile salesperson who
has a warm and perusable manner, asks about your work and hobbies, and seems genuinely
interested in your taste in cars. Can you assume that this behavior reflects the salesperson's
personality? You probably cannot, because of the .influence of the situation. This person is
trying to sell you a car, and in this particular situation he or she probably treats all customers in
this manner.
You can see that characteristics of the perceiver, the target, and the situation all affect social
perception. It would be wonderful if all of us had accurate social perception skills.
Unfortunately, barriers often prevent us from perceiving another person accurately.
Barriers to Social Perception
What factors do you think affect social perception? Several factors lead us to form inaccurate
impressions of others. Five of these barriers to social perception are: selective perception,
stereotyping, first-impression error, implicit personality theories, and self-fulfilling prophecies.
Selective Perception: We receive a vast amount of information. Selective perception is our ten-
dency to choose information that supports our viewpoints. Individuals often ignore information
that makes them feel uncomfortable or threatens their view points. Suppose, for example, that a
sales manager is evaluating his employees. One employee does not get along well with
colleagues and rarely completes sales report on time.
Stereotypes: A stereotype is a generalization about a group of people. Stereotypes reduce
information about other people to a workplace level and they are efficient for compiling and
using information.

First impressions: First impressions are lasting impressions, so the saying goes. Individuals
place a good deal of importance on first impressions, and for good reason. We tend to remember
what we perceive first about a person, and sometimes we are quite reluctant to change our initial
impressions. First-impression error means that we observe a very brief bit of a person's behavior
in our first encounter and infer that this behavior reflects what the person is really like. Primacy
effects can be particularly dangerous in interviews, given that we form first impressions quickly
and that these impressions may be the basis for long-term employment relationships.
Implicit personality theories: Implicit personality theories can also lead to inaccurate
perceptions. We tend to have our own mini-theories about how people look and behave. These
theories help us organize our perceptions and take shortcuts instead of integrating new
information all the time. We are cognitive misers. Because the world is complex and ambiguous
and we have a limited mental capacity, we try to expend the least amount of effort possible in
attempting to make sense of the world.
Self-fulfilling Prophecies: Self-fulfilling prophecies are also barriers to social perception.

Sometimes our expectations affect the way we interact with others such that we get what we
wish for. Self-fulfilling prophecy is also known as the Pygmalion effect, named for the sculptor
in Greek mythology who carved a statue of a woman that came to life when he prayed for this
wish and it was granted. "Early studies of self-fulfilling prophecy were conducted in elementary
school classrooms.
2.2.2 Attitudes
Attitudes: evaluative statements – either favorable or unfavorable – concerning objects, people,
or events. They reflect how one feels about something.
Attitudes can affect an employee’s performance, satisfaction, and turnover. There are four
main issues we must examine regarding attitudes: (1) the main components that make up
attitudes, (2) how consistent they are, (3) how they relate to behavior, and (4) what are the
major attitudes that relate to jobs.
A. Main Components of Attitudes. There are three main components of attitudes:
1. Cognition. What a person thinks about an object, person, or event. This component is
often given in emotionless evaluative statements. These thoughts (or cognitions) are the
basis for the next component of attitude.
“Ice cream is cold” is a cognitive statement.
2. Affective. This component is the emotional overlay to the cognitive thought. It expresses
how we feel about that object, person or event. The affective component builds on, and
amplifies, the cognitive component. In reality, these two components are often
inseparable.

“I love ice cream on a hot day” is an affective (“I love”) statement.
3. Behavior. This is the actual or intended behavior brought about by the first two
components of attitude. It is what we will do about that object, person, or event.
“It is hot, I am going to the store to get a half-a-gallon of ice cream” expresses a
behavior in keeping with the person’s attitude toward ice cream.
B. Consistency of Attitudes. People try to be consistent. They want their attitudes (and
their behaviors) to be aligned so that they appear rational. When people’s attitudes are not
consistent, they will either change one of the attitudes, their behavior, or rationalize away
the inconsistency.
Cognitive Dissonance: refers to any inconsistency that an individual might perceive

between two or more attitudes, or between behavior and attitudes.
C. Do Behaviors Always Follow from Attitudes? While attitudes may not be directly
causal, knowing a person’s attitude allows for a reasonable prediction of future behavior.
D. Major Job Attitudes. There are three important attitudes toward work that OB has
traditionally studied: job satisfaction, job involvement, and organizational commitment.
There are two other work-related attitudes that are attracting attention: perceived
organizational support and employee engagement.
1. Job Satisfaction. This attitude relates to how an employee feels about the job. High job
satisfaction means strong positive feelings about it; low satisfaction means strong negative
feelings exist. Because of the critical nature of this attitude to OB, we will explore it
deeply in a moment.
Job Satisfaction. A positive feeling about one’s job resulting from an evaluation
of its characteristics.
2. Job Involvement. Closely related to psychological empowerment, this attitude describes

how much a person “buys into” their job based on the job’s worth to that person and how
much control the employee has over the job itself. High levels of job
involvement/empowerment are related to higher job performance, better organizational
citizenship behaviors, fewer absences, and lower turnover.
Job Involvement. The degree to which people identify psychologically with their
jobs and consider their perceived performance level important to self-worth.

Psychological Empowerment. Employees’ beliefs in the degree to which they
affect their work environment, their competence, the meaningfulness of their job,
and the perceived autonomy in their work.
3. Organizational Commitment. Similar to job involvement, this attitude shows how

strongly the employee identifies with the firm for which he or she is working (job
involvement focuses on identification with the job, not the organization).
Organizational Commitment. A state in which an employee identifies with a

particular organization and its goals and wishes to maintain membership in the
organization.
4. Perceived Organizational Support (POS). A recent addition to the studied work attitudes,
this measures how much an employee trusts the organization.
Perceived Organizational Support. The degree to which employees believe the

organization values their contribution and cares about their well-being.
5. Employee Engagement. Another recent addition, this attitude measures how deeply
involved the employees feel they are in their work.
Employee Engagement. An individual’s involvement with, satisfaction with, and

enthusiasm for, the work they do.
6. Are Job Attitudes Distinct? One of the weaknesses of attitude research in OB is that the
identified attitudes are deeply related and correlated. It is possible that all of these
variables are just facets of the same basic attitude. This redundancy is inefficient and
confusing, but the study of attitudes is a work in progress and situations such as this are
typical as social scientists strive to understand the workplace.
2.2.3. Personality
Personality is an individual difference that lends consistency to a person’s behavior. Personality
is defined as a relatively stable set of characteristics that influence an individual’s behavior.
Although there is a debate about the determinants of personality, it is possible to conclude that
there are several origins.
Personality Characteristics in Organizations

Managers should learn as much as possible about personality in order to understand their
employees. Hundreds of personality characteristics have been identified. But will focus on
selected five characteristics because of their particular influences on individual behavior in
organizations. These are: locus of control, self-esteem, self-efficacy, self-monitoring, and
positive/negative affect.
Locus of Control
An individual's generalized belief about internal (self) versus external (situations or others)
control is called locus of control. People who believe they control what happens to them are said
to have an internal locus of control, whereas people who believe that circumstances or other
people control their fate have an external locus of control. Research on locus of control has
strong implications for organizations. Internals (those with an internal locus of control) have
been found to have higher job satisfaction, to be more likely to assume managerial positions, and
to prefer participative management styles.
Self-Esteem
Self-esteem is an individual's general feeling of self-worth. Individuals with high self-esteem

have positive feelings about themselves, perceive themselves to have strengths as well as
weaknesses, and believe their strengths are more important than their weaknesses. Individuals
with low self-esteem view themselves negatively.
Self-efficacy
An individual's beliefs and expectancies about his or her ability to accomplish a specific task
effectively is known as self-efficacy. Individuals with high self-efficacy believe that they have
the ability to get things done, that they are capable of putting forth the effort to accomplish the
task, and that they can overcome any obstacles to their success. There are four sources of self--
efficacy: prior experiences, behavior models (witnessing the success of others), persuasion
from other people, and assessment of current physical and emotional capabilities.
Self-monitoring
A characteristic with great potential for affecting behavior in organizations is self-monitoring-

the extent to which people base their behavior on cues from people and situations. High self-
monitors pay, to what is appropriate in particular situations and to the behavior of other people,
and they behave accordingly. Low self-monitors, in contrast, are not as vigilant to situational
cues and act from internal states rather than paying attention to the situation. As a result, the
behavior that follow self-monitors is consistent across situations. High self-monitors, because
their behavior varies with the situation, appear to be more unpredictable and less consistent.

Positive/Negative Affect
Individuals who focus on the positive aspects of themselves, other people, and the world in
general are said to have positive affect.
Positive affect: An individual’s tendency to emphasize positive aspects of him/herself, other
people, and the world in general.
In contrast, those who accentuate the negative in themselves, others, and the world are said to
possess negative affect (also referred to as negative affectivity). Interviewers who exhibit
positive affect evaluate job candidates more favorably than do interviewers whose affect is
neutral. Employees with positive affect are absent from work less often.
Negative affect: An individual’s tendency to emphasize negative aspects of him/herself, other

people, and the world in general.
Individuals with negative affect report more work stress. Individual affect also influences the
work group. Negative individual affect produces negative group affect, and this leads to less
cooperative behavior in the work group.
Positive affect is a definite asset in work settings. Managers can do several things to promote
positive affect, including allowing participative decision making and providing pleasant working
conditions. We need to know more about inducing positive affect in the workplace.
Some situations are strong situations in that they overwhelm the effects of individual
personalities. A weak situation, in contrast, is one that is open to many interpretations.
Measuring Personality
Several methods can be used to assess personality. These include projective tests, behavioral
measures, and self-report questionnaires.
The Projective Test:
The projective test is one method used to measure personality. In these tests, individuals are
shown a picture, abstract image, or photo and are asked to describe what they see or to tell a
story about what they see. The rationale behind projective tests is that each individual responds
to the stimulus in a way that reflects his or her unique personality.

Behavioral Measures
Measuring behavior involves observing an individual's behavior in a controlled situation. We

might assess a person's sociability, for example, by counting the number of times he or she
approaches strangers at a party. The behavior is scored in some manner to produce an index of
personality.
Self-report questionnaire
The most common method of assessing personality is the self-report questionnaire. Individuals
respond to a series of questions, usually in agree/disagree or true/false format.
We now turn to perception, another psychological process, which forms the basis for individual
differences. Perception shapes the way we view the world, and it varies greatly among
individuals.
2.2.4. Values
Values exist at a deeper level than attitudes and are more general and basic in nature. We use
them to evaluate our own behavior and that of others. As such, they vary widely among
individuals. Values are enduring beliefs that a specific mode of conduct or end state of
existence is personally or socially preferable to an opposite or converse mode of conduct or
end state of existence. Values give us a sense of tight wrong, good and bad.
Types of Values
Milton Rokeach distinguished between two types of values: instrumental and terminal.
Instrumental values: Values that represent the acceptable behaviors to be used in achieving
some end sate. Instrumental values reflect the means to achieving goals; that is, they represent
the acceptable behaviors to the acceptable behaviors to be used in achieving some end state.
Instrumental values identified by Rokeach include ambition, honesty, self-sufficiency, and
courageousness.
Terminal values: Terminal values in contrast, represent the goals to be achieved, or the end
states of existence. Rokeach identified happiness, love, pleasure, self-respect, and freedom
among the terminal values. A complete list of instrumental and terminal values is presented in
Table 2.2 Instrumental and terminal values work in concert to provide individuals with goals to
strive for and acceptable ways to achieve the goals.
Table 2.2. Instrumental and Terminal Values

Instrumental Values
Honesty Ambition Responsibility
Forgiving nature Open-mindedness Courage
Helpfulness Cleanliness Competence
Self-control Affection/love Cheerfulness
Independence Politeness Intelligence
Obedience Rationality Imagination
Terminal Values
World peace Family security Freedom
Happiness Self-respect Wisdom
Equality Salvation Prosperity
Achievement. Friendship National security
Inner peace Mature love Social respect
Beauty in art and nature Pleasure Exciting, active life
Work Values
Work values are important because they affect how individuals behave on their jobs in terms of
what is right and wrong. The work values most relevant to individuals are achievement, concern
for others, honesty, and fairness.. These behaviors constitute organizational citizenship, as we
discussed earlier. Honesty is accurately providing information and refusing to mislead others for
personal gain. Fairness emphasizes impartiality and recognizes different points of view.
Individuals can rank-order these values in terms of their importance in their work lives.
2. 2.5. Ethical Behavior
Ethics is the study of moral values and moral behavior. Ethical behavior is acting in ways
consistent with one's personal values and the commonly held values of the organization and
society. Ethical issues are a major concern in organizations. There is evidence that paying
attention to ethical issues pays off for companies. Doing the right thing can positively affect an
organization's performance.

Individual influences
Value systems
Locus of control
Machiavellianism
Cognitive moral development
Ethical behavior
Organizations influences
Codes of conduct
Norms
Modeling
Rewards and punishments
Figure 2.4: Individual/Organizational Model of Ethical Behavior
It has been suggested that ethical decision making requires three qualities of individuals:
1. The competence to identify ethical issues and evaluate the consequences of alternative
courses of action.
2. The self-confidence to seek out different opinions about the issue and decide what is right
in terms of a particular situation.
3. Tough mindedness-the willingness to make decisions when all that needs to be known
cannot be known and when the ethical issue has no established, unambiguous solution.
The model presents four major individual differences that affect ethical behavior: Value systems,
Locus of control, Machiavellianism, and Cognitive Moral Development.
Value Systems
Values are systems of beliefs that affect what the individual defines as right, good, and fair.
Ethics reflects the way the values are acted out. Ethical behavior, as noted earlier, is acting in
ways consistent with one's personal values and the commonly held values of the organization and
society.
Locus of Control
Another individual influence on ethical behavior is locus of control. In the previous section
we have seen locus of control as a personality variable that affects individual behavior.
Recall that individuals with an internal locus of control believe they control events in their

lives and that they are responsible for what happens to them. In contrast, individuals with an
external locus of control believe that outside forces such as fate, chance, or other people
control what happens to them.
Machiavellianism
Another individual difference that affects ethical behavior is Machiavellianism. Niccolo

Machiavelli was a sixteenth century Italian statesman. He wrote Prince, a guide for acquiring
and using power. The primary method for acquiring power that he suggested was manipulation
of others. Machiavellianism, then, is a personality characteristic indicating one's willingness
to do whatever it takes to get one's own way.
A high-Mach individual behaves in accordance with Machiavelli's ideas, which include the
notion that it is better to be feared than loved. High-Machs tend to use deceit in relationships,
have a cynical view of human nature, and have little concern for conventional notions of right
and wrong. They are skilled manipulators of other people, relying on their persuasive abilities.
Low-Machs, in contrast, value loyalty and relationships. They are less willing to manipulate
others for personal gain and are concerned with others' opinions.
Cognitive Moral Development
You know how the level of cognitive development affects ethical behavior? Cognitive
development refers to the process of moving through stages of maturity in terms of making
ethical decisions. An individual's level of cognitive moral development also affects ethical
behavior. Psychologists proposed that as individuals mature, they move through a series of six
stages of moral development.
2. 2.6. Learning
All complex behavior is learned. As managers, we wish to explain and predict behavior so
we must understand how behaviors are learned.
Learning Defined: any relatively permanent change in behavior that occurs as a result of
experience. As this definition suggests, learning is a change that must become habitual and
is gained through experience, either directly (by doing) or indirectly (through study).
Theories of Learning
Operant Conditioning. Operant conditioning adherents believe that behavior is a function

of its consequences. B. F. Skinner argued that people modify their behaviors either to

receive something they desire or to avoid a negative consequence. Learning is a result of
the repeated experience of reinforcement following an exhibition of behavior.
Skinner’s learning philosophy, behaviorism, removed the mind and thoughts from
learning. Behavior was solely based on an unthinking response to a stimulus. The
traffic light turns red and you stop without thinking: you have been conditioned (you
have learned) to do so.
Some of Skinner’s key observations were:
a. The incidence of behavior increases when that behavior is positively reinforced.
b. Rewards are most effective in reinforcing behavior when they are given
immediately after the performance of the desired behavior.
c. Behaviors that are not rewarded, or which are punished, are less likely to be
repeated.
Social Learning. In this learning theory, people do not have to directly experience
something to learn it. People can learn through observing the experience of others either
by reading about it, listening to it, or watching it.
One of the ways to learn is through observing a model – a person or thing that
demonstrates the behaviors to be reinforced or reduced. (This is where the term
“modeling the behavior” comes from.) There are four processes that determine the
strength of influence a given model will have on a person:
a. Attentional Processes. People must be able to pay attention to the model and
recognize its critical features. Factors that increase attention are models that are
attractive, available, important to the viewer, and which appear to be similar to the
viewer.
b. Retention Processes. To be effective, the model must be memorable. Actions

must be able to be recalled in the absence of the model.
c. Motor Reproduction Processes. Observing a behavior is insufficient. The actions

modeled must be performed by the employee to become learned.
d. Reinforcement Processes. Harking back to operant conditioning, people will

behave in the modeled fashion if that behavior is accompanied by positive
incentives or rewards. Positively reinforced learned behaviors will result in
higher attention levels, better retention and more frequent performance.

CHAPTER 3
FOUNDATIONS OF GROUP BEHAVIOUR
3.1. Definition: Groups

Can you define a group? A group may be defined as a collection of two or more people who
work with one another regularly to achieve common goals. In a true group, members are
mutually dependent on one another to achieve common goals, and they interact with one another
regularly to pursue those goals over a sustained period of time. Groups are good for both
organizations and their members, helping to accomplish important tasks and to maintain a high-
quality workforce.
What Is An Effective Group?
An effective group is one that achieves high levels of task performance, member satisfaction
and team viability. With regard to task performance, this group achieves its performance goals—
in the standard sense of quantity, quality, and timeliness of work results. For a permanent work
group, such as a manufacturing team, this may mean meeting daily production targets. For a
temporary group, such as a new policy task force, this may involve meeting a deadline for
submitting a new organizational policy to the company president. With regard to member
satisfaction, an effective group is one whose members believe that their participation and
experiences are positive and meet important personal needs.
They are satisfied with their tasks, accomplishments, and interpersonal relationships. With regard
to team viability, the members are sufficiently satisfied to continue working well together on an
ongoing basis and/or to look forward to working together again at some future point in time. The
group in this way has all-important long-term performance potential.
Characteristics of a Well-Functioning Effective Group:
 The atmosphere tends to be relaxed, comfortable, and informal.
 The group’s task is well understood and accepted by the members.
 The members listen well to one another; most members participate in a good deal of task-
relevant discussion.
 People express both their feelings and their ideas.
 Conflict and disagreement are present and centered around ideas or methods, not
personalities or people.
 The group is aware and conscious of its own operation and function.
 Decisions are usually based on consensus, not majority vote.
 When actions are decided, clear assignments are made and accepted by members of the
group.

3.2. Group and Intergroup Dynamics
Group Dynamics: Group dynamics are the forces operating in groups that affect the ways
members work together. The effectiveness of any group requires more than the correct inputs. It
always depends in part on how well members work together to utilize these inputs to produce the
desired outputs. When we speak about people “working together” in groups, we are dealing with
issues of group dynamics. From the perspective of an open system, group dynamics are the
processes through which inputs are transformed into outputs.
Group dynamics refers to the attitudinal and behavioral characteristics of a group. Group
dynamics concern how groups form, their structure and process, and how they function. Group
dynamics are relevant in both formal and informal groups of all types. In an organizational
setting, groups are a very common organizational entity and the study of groups and group
dynamics is an important area of study in organizational behavior.
What Goes on Within Groups?

George Homans described a classic model of group dynamics involving two sets of behaviors—
required and emergent. In a work group, required behaviors are those formally defined and
expected by the organization. For example, they may include such behaviors as punctuality,
customer respect, and assistance to co-workers. Emergent behaviors are those that group
members display in addition to what the organization asks of them. They derive not from outside
expectations but from personal initiative.
What Goes On Between Groups?
The term intergroup dynamics refers to the dynamics that take place between two or more
groups. Organizations ideally operate as cooperative systems in which the various components
support one another. In the real world, however, competition and intergroup problems often
develop within an organization and have mixed consequences
3.3. Stages of Group Development
How do you think groups develop? As applied to group development, group dynamics is
concerned with why and how groups develop. There are several theories as to why groups
develop. A classic theory, suggests that groups develop based on activities, interactions, and
sentiments. Basically, the theory means that when individuals share common activities, they will
have more interaction and will develop attitudes (positive or negative) toward each other. The
major element in this theory is the interaction of the individuals involved.
Social exchange theory offers an alternative explanation for group development. According to
this theory, individuals form relationships based on the implicit expectation of mutually
beneficial exchanges based on trust and felt obligation. Thus, a perception that exchange
relationships will be positive is essential if individuals are to be attracted to and affiliate with a
group.

Social identity theory offers another explanation for group formation. Simply put, this theory
suggests that individuals get a sense of identity and self-esteem based upon their membership in
salient groups. The nature of the group may be demographically based, culturally based, or
organizationally based. Individuals are motivated to belong to and contribute to identity groups
because of the sense of belongingness and self-worth membership in the group imparts.
According to Tuckman's theory, there are five stages of group development: forming, storming,
norming, performing, and adjourning. During these stages group members must address
several issues and the way in which these issues are resolved determines whether the group will
succeed in accomplishing its tasks.
1. Forming. This stage is usually characterized by some confusion and uncertainty. The
major goals of the group have not been established. The nature of the task or leadership of
the group has not been determined. Thus, forming is an orientation period when members
get to know one another and share expectations about the group. Members learn the
purpose of the group as well as the rules to be followed. The forming stage should not be
rushed because trust and openness must be developed.
2. Storming. The storming stage of group development is a period of high emotionality and
tension among the group members. During this stage, hostility and infighting may occur,
and the group typically experiences many changes. Coalitions or cliques may form as
individuals compete to impose their preferences on the group and to achieve a desired
status position. Outside demands, including premature expectations for performance
results may create uncomfortable pressures.
3. Norming.
The norming stage of group development, sometimes called initial integration, is the point at
which the group really begins to come together as a coordinated unit. The turmoil of the
storming stage gives way to a precarious balancing of forces.
With the pleasures of a new sense of harmony, group members will strive to maintain
positive balance. Holding the group together may become more important to some than
successfully working on the group’s tasks. Minority viewpoints, deviations from group
directions, and criticisms may be discouraged as group members experience a preliminary
sense of closeness.
4. Performing.
The performing stage of group development, sometimes called total integration, marks the
emergence of a mature, organized, and well-functioning group. The group is now able to deal
with complex tasks and handle internal disagreements in creative ways. The structure is

stable, and members are motivated by group goals and are generally satisfied. The primary
challenges are continued efforts to improve relationships and performance. Group members
should be able to successfully as opportunities and demands change over time.
5. Adjourning
A well-integrated group is able to disband, if required, when its work is accomplished. The
adjourning stage of group development is especially important for the many temporary
groups that are increasingly common in the new workplace, including task forces,
committees, project teams and the like.
3.4. Types of Groups

One common way to classify group is by whether they are formal or informal in nature. By
formal groups, we mean those defined by the organization’s structure, with designated work
assignments establishing tasks. In formal groups, the behaviour that one should engage in are
stipulated by and directed toward organizational goals. In contrast, informal groups are
alliances that are neither formally structured nor organizationally determined. These groups are
natural formations in the work environment that appear in response to the need for social contact.
For instance three employees from different departments who regularly eat lunch together are
examples of an informal group.
Types of Formal Groups
Formal work groups are established by an organization to achieve organizational goals. Formal
groups may take the form of command groups, task groups, and functional groups.
Command Groups
Command groups are specified by the organizational chart and often consist of a supervisor and
the subordinates that report to that supervisor. An example of a command group is an academic
department chairman and the faculty members in that department.
Task Groups
Task groups represent those working together to complete a job task. However a task group’s
boundaries are not limited to its immediate hierarchical supervisor. It can cross command
relationships. For instance, if a college student is accused of campus crime, it may require
communication and coordination among the dean of academic affairs, the dean of students, the
registrar, the director of security, and student’s advisor. Such a formation would constitute a task
group.

Functional Groups
A functional group is created by the organization to accomplish specific goals within an

unspecified time frame. Functional groups remain in existence after achievement of current goals
and objectives. Examples of functional groups would be a marketing department, a customer
service department, or an accounting department.
Types of Informal Groups

Informal groups emerge without being officially designated by the organization. They form
spontaneously and are based on personal relationships or special interests, and not on any
specific organizational endorsement. They are commonly found within most formal groups.
Informal groups could be: Interest based groups, Friendship groups and Reference groups.
Interest Groups
People who may or may not be aligned into common or task groups may affiliate to attain a
specific objective with which each concerned. This is an interest group. Employees who band
together to have their vacation schedules altered, to support a peer who has been fired, or to seek
improved working conditions represent the information of a united body to further their common
interest.
Friendship Groups
Groups often develop because the individual members have one or more common characteristics.
We call these information friendship groups.
Friendship groups are formed by members who enjoy similar social activities, political beliefs,
religious values, or other common bonds. Members enjoy each other's company and often meet
after work to participate in these activities. For example, a group of employees who form a
friendship group may have an exercise group, a softball team, or a potluck lunch once a month.
Reference Groups
A reference group is a type of group that people use to evaluate themselves. According to
Cherrington, the main purposes of reference groups are social validation and social comparison.
Social validation allows individuals to justify their attitudes and values while social comparison
helps individuals evaluate their own actions by comparing themselves to others. Reference
groups have a strong influence on members' behavior.

3.5. Group Structure
Group structure is a pattern of relationships among members that hold the group together and
help it achieve assigned goals. Structure can be described in a variety of ways. Among the more
common considerations are group size, group roles, group norms, and group cohesiveness.
Group Size
Group size can vary from 2 people to a very large number of people. Small groups of two to ten
are thought to be more effective because each member has ample opportunity to participate and
become actively involved in the group. Large groups may waste time by deciding on processes
and trying to decide who should participate next. Group size will affect not only participation but
satisfaction as well.
Group Roles
In formal groups, roles are usually predetermined and assigned to members. Each role will have
specific responsibilities and duties. There are, however, emergent roles that develop naturally to
meet the needs of the groups.
Group Norms
Norms are acceptable standards of behavior within a group that are shared by the members of the
group. Norms define the boundaries of acceptable and unacceptable behavior. They are typically
created in order to facilitate group survival, make behavior more predictable, avoid embarrassing
situations, and express the values of the group. Each group will establish its own set of norms
that might determine anything from the appropriate dress to how many comments to make in a
meeting.
Group Cohesiveness
Cohesiveness refers to the bonding of group members and their desire to remain part of the
group. Many factors influence the amount of group cohesiveness. Generally speaking, the more
difficult it is to obtain group membership the more cohesive the group. Groups also tend to
become cohesive when they are in intense competition with other groups or face a serious
external threat to survival.
Groupthink

Groupthink occurs when members of a group exert pressure on each other to come to a
consensus in decision making. Groupthink results in careless judgments, unrealistic appraisals of
alternative courses of action, and a lack of reality testing. It can lead to a number of decision-
making issues such as the following:
1. Incomplete assessments of the problem,

2. Incomplete information search,
3. Bias in processing information,
4. Inadequate development of alternatives, and
5. Failure to examine the risks of the preferred choice.
Evidence suggests that groups typically outperform individuals when the tasks involved require a
variety of skills, experience, and decision making. Groups are often more flexible and can
quickly assemble, achieve goals, and disband or move on to another set of objectives.
Social Loafing
Social loafing occurs when one or more group members rely on the efforts of other group
members and fail to contribute their own time, effort, thoughts, or other resources to a group.
This may create a real drag on the group's efforts and achievements. Although some scholars
argue that social loafing, or free riding, is rational behavior from the individual's standpoint to
restore an experience of inequity or when individual efforts are hard to observe, it nevertheless
short changes the group, which loses potentially valuable resources possessed by individual
members.
3.6. Group Decision-Making
Groups versus the Individual Whether or not a group’s decisions are better than an
individual’s decisions depends on a number of factors. To understand the group decision-
making, we must examine its strengths and weaknesses.
Strengths of Group Decision-Making The use of groups in decision-making provides the

following benefits:
 Generates information and knowledge that is more complete.

 Offers increased diversity of views.
 Increases the acceptance of the solution.
Weaknesses of Group Decision-Making:
 Typically, it takes more time to reach a solution.

 Greater conformity pressures exist.
 Discussion can be dominated by one or a few members.
 Ambiguous responsibility decreases accountability.

Effectiveness and Efficiency.
Effectiveness. Whether or not group decisions are more effective than are those of
an individual depends on the criteria used for defining effectiveness.
1) Accuracy: group decisions are generally more accurate than that of the average individual in
the group, but less accurate than the judgments of the most accurate group member.
2) Speed: individual decision-making is much faster than group decision-making.
3) Creativity: groups tend to be more creative than are individuals.
4) Degree of acceptance: group decisions tend to be more readily accepted than are those of an
individual.
Efficiency. Groups are far less efficient than are individual decision-makers. One of
the few exceptions to this is when a decision requires a large quantity of diverse input.
Group think and Group shift. These two phenomena of group decision-making have the
potential to affect the group's ability to appraise alternatives subjectively and to arrive at
quality decision solutions.
Groupthink: occurs when group members become so enamored of seeking concurrence

with the norm that the desire for consensus overrides the realistic appraisal of alternative
courses of action and limits the full expression of deviant, minority, or unpopular views.
It describes a deterioration of an individual's mental efficiency, reality testing, and moral
judgment as a result of group pressures.
Symptoms of Groupthink.
5) Group members rationalize away any resistance to the assumptions they have made, no
matter how strong the evidence may be that those assumptions are incorrect.
6) Members apply direct pressures on those who momentarily express doubts about any of the
group’s shared views or who question the validity of arguments supporting the alternative
favored by the majority.
7) Members who have doubts or hold differing points of view keep silent about their misgivings
and may even internally minimize the importance of their doubts.
8) The illusion of unanimity: unless a group member speaks out, his or her silence is taken as
concurrence.

Optimal Conditions for Groupthink. Not all groups experienced groupthink; it appears
most often when these three conditions are met.
9) A clear group identity exists.
10) Members hold a positive image of their group that they wish to protect.
11) The group perceives a collective threat to this positive image.
Minimizing Groupthink. Groupthink is not a dissenter-suppression mechanism as

much as it is a means for a group to protect its positive image. To reduce the chance
of groupthink, managers use the following techniques.
12) Keep group size below ten to maintain feelings of personal responsibility in group members.
13) Encourage group leaders to actively seek input from all members and avoid expressing their
own opinions, especially in the early stages of the deliberation.
14) Appoint one group member to act as the "devil's advocate," that is, a person whose role is to
overtly challenge the majority opinion and offer diverse perspectives.
Groupshift. A special case of groupthink, groupshift is a situation in which the discussion

in a group leads to a significant shift in the positions of its members toward more extreme
positions from those initially held by the members before the discussion. Thus, group
discussions tend to exaggerate the initial positions of the group members and of the group
itself.
Increased Risk-Taking. Often groupshift causes groups to be far less risk adverse than
they initially were. Some of the reasons for this increase in the acceptance of risk may
be the following.
15) Discussion in a group creates familiarity among its members, which would increase their
comfort level with each other. As they become more comfortable in expressing their
opinions, they also tend to become more bold and daring.
16) At a societal level, most developed countries value risk, and therefore value individuals who
exhibit risk-taking behavior. Group discussions may motivate members to show that they
are at least as willing to accept risk as are their peers.
17) The most probable explanation for this increase is that group decision-making diffuses
responsibility. The lack of personal accountability allows for greater risk-taking.
Group Decision-Making Techniques. One of the most common forms that groups take
when making decisions is that of interacting groups. The three techniques presented

below are designed to reduce many of the problems inherent in the traditional interacting
group.
Interacting Groups: groups in which the members meet face-to-face and rely on
both verbal and nonverbal interaction to communicate with each other.
Brainstorming. The technique designed to generate a list of creative alternatives. This

somewhat ineffective technique does not lead to a solution, and may in fact lead to
fewer creative alternatives than an individual could come up with, due to production
blocking (distractions to thought caused by the technique itself).
Nominal Group Technique (NGT). This technique restricts discussion or interpersonal

communication during the decision-making process. This is why it is referred to as a
"nominal" (in name only) group technique.
Computer-Assisted Group or Electronic Meeting. This variant of the nominal group

technique utilizes sophisticated computer technology. Far larger groups (up to 50
individuals) can be gathered together to use this technique. NGT steps are taken, but
the answers are recorded via keyboard onto computer terminals. The results are then
displayed on a projection screen.

Chapter 4
Motivation Concepts and their Applications
Poorly motivated workers express themselves through detrimental behaviors such as

absenteeism and high turnover. It is important that motivational theories are understood and
applied in the workplace.
4.1 Definitions and Theories of Motivation
Motivation: the processes that account for an individual’s intensity, direction, and
persistence of effort toward attaining a goal, specifically for OB, toward attaining an
organizational goal.
Intensity: how hard a person tries to meet a goal.
Direction: efforts are channeled toward organizational goals.
Persistence: how long a person maintains effort toward a goal.
EARLY THEORIES OF MOTIVATION
1. Maslow’s Hierarchy of Needs Theory. In this, perhaps best known (and least
supported) of all motivational theories, Abraham Maslow proposed that there are five
levels of human needs. As each of the lower level needs are satisfied, the next
unsatisfied need becomes dominant. Satisfied needs no longer motivate, only
unsatisfied needs motivate people.
a. Physiological: lower order need, includes hunger, thirst, shelter, sex, and other
bodily needs. Lower order needs are satisfied externally, through forces outside
of the person.
b. Safety: lower order need, includes security and protection from physical and
emotional harm.
c. Social: upper order need, includes affection, belongingness, acceptance, and
friendship. Upper order needs are satisfied internally, that is, from within the
person.
d. Esteem: upper order need, includes internal (self-respect, autonomy, and
achievement) and external (status, recognition, and attention) esteem factors.
e. Self-actualization: upper order need, defined as the drive to “be all one can be” it
includes growth, achieving one’s potential, and self-fulfillment.
2. McGregor’s Theory X and Theory Y. Douglas McGregor’s theory proposed that
there were two basic views of human nature, one essentially negative (Theory X) and

the other positive (Theory Y). Which view a manager believed was true would give
that manager a pre-set series of assumptions and related behaviors.
Theory X. In this negative view of human nature, workers are basically lazy and need
firm guidance. The assumptions related to Theory X are:
Work Avoidance. Employees dislike work and so will try to avoid it.
Need for Control. Since employees dislike work, they must be coerced, controlled, or threatened
with punishment to get them to achieve organizational goals.
Avoidance of Responsibility. Workers seek formal direction and dislike taking responsibility.
Theory Y. In this positive view, employees are willing workers who actively seek
responsibility. The underlying assumptions are:
Work as play. Work is as natural as play or rest.
Commitment. When employees are committed, they will exercise self-direction and self-control.
Accepting Responsibility. Workers accept, and will even seek, responsibility.
Innovation is Common. The ability to make innovative decisions is widely disbursed throughout
the population; it does not only exist in the managerial ranks.
3. Herzberg’s Two-Factor (Motivation-Hygiene) Theory. Frederick Herzberg

proposed that an individual’s relation to work is basic and that one’s attitude toward
work can very well determine success or failure. In other words, things that people
feel good about at work are motivating and those things they don’t feel good about
are de-motivating.
Hygiene Factors. These workplace factors, when not met, lead to job dissatisfaction. When they
are met, they do NOT lead to job satisfaction, but rather, to a lack of dissatisfaction. So, meeting
hygiene factors does NOT increase motivation, it merely placates the workers. Hygiene factors
include quality of supervision, pay, company policies, physical working conditions, relations
with others, and job security.
Motivation Factors. These are intrinsically rewarding factors in the work environment such as
promotion and personal growth opportunities, recognition, responsibility, and achievement.
Meeting these factors will increase motivation by creating a satisfying work environment.

CONTEMPORARY THEORIES OF MOTIVATION
Unlike the historic theories of motivation, these contemporary theories of motivation do have
a reasonable degree of supporting documentation. It is important to remember that these are
still theories. None of these has been totally proven to be true.
McClelland's Theory of Needs. David McClelland created a theory based on three needs:
Need for Achievement (nAch): the drive to excel and to achieve in relation to a set of
standards. Achievers seek rapid feedback on performance, they like tasks of intermediate
difficulty, and they accept personal responsibility for success or failure.
High achievers tend to be successful entrepreneurs. However, having a high need for
achievement does not necessarily mean the person would be a good manager for
larger organizations, as his or her desire for recognition supersedes his or her concern
for the organization.
Employees with low achievement needs can be trained to increase their need for
achievement.
Need for Power (nPow): the need to make others behave in a way they would not have behaved
otherwise. People with high power needs feel they have to have an impact or be influential with
other people. They prefer to be placed into competitive and status-oriented situations. High
power people are more concerned with prestige and gaining influence over others than with
effective performance.
Need for Affiliation (nAff): the desire for friendly and close interpersonal relationships.
Affiliates strive for friendship, prefer cooperative situations, and desire friendships with a high
degree of mutual understanding.
The best managers appear to be those with a high need for power, and a low need for
affiliation.
Cognitive Evaluation Theory. This theory proposes that the introduction of extrinsic rewards,
such as pay, tends to decrease overall motivation. This is because the intrinsic reward of the
work itself declines in the face of extrinsic rewards.
Goal-Setting Theory. This theory studies the effects goal specificity, challenge, and feedback
has on performance. The study of goal setting has created the following general rules:
Specific goals produce a higher level of output than do generalized goals.

Typically, the more difficult the goal, the higher level of performance, assuming that
goal has been accepted by the employee. This is because:
Management by Objectives. To formalize goal-setting theory into an organization one of the

more effective ways to do this is through management by objectives or MBO. Management by
objectives emphasizes participatively set goals that are tangible, verifiable, and measurable.
MBO operationalizes the concept of objectives by devising a process by which objectives

cascade down through the organization. The result of MBO is a hierarchy of objectives
that build toward organizational objectives. It also provides specific performance goals
for individuals.
Four ingredients common to MBO programs: goal specificity, participation in decision-

making ,an explicit time period, and performance feedback.
Bandura's Self-Efficacy Theory (also known as "social cognitive theory" or "social learning
theory"). Typically, people with high self-efficacy respond better to challenges and negative
feedback than those with low self-efficacy.
Self-efficacy: related to confidence, this is an individual's belief that he or she is

capable of performing a task.
Adams' Equity Theory. This view holds that motivation can be affected by the
comparisons employees make of their job inputs (effort, experience, education,
confidence) and the job's outcomes (salary levels, raises, recognition) relative to the
inputs and outcomes of other employees. If the ratios of inputs to outputs are roughly
equal between employees, a state of equity is said to exist. The situation is perceived to
be fair.
Equity Theory and Pay. The following prepositions are based on equity theory under conditions
of inequitable pay. The purpose of each of the prepositions is to bring the ratios back into
balance.
Justice and Equity. Equity is closely tied to a desire for fairness and fairness is normally
associated with justice. There are a number of views of justice that relate to equity theory.
Distributive Justice. The historical type of justice used in equity theory,

distributive justice is the perceived fairness of the amount and allocation of
rewards among individuals. This form of justice is most strongly related to
satisfaction with outcomes and organizational commitment.
Organizational Justice. In this, more recently accepted view of justice, justice is

the employee’s overall perception of what is fair in the workplace. The key

element in organizational justice is perception, and since we've already learned
that perception is a highly individual process, it should be obvious that judgments
of fairness in organizations can vary significantly between individuals.
Procedural Justice. This view of justice focuses on the fairness of the process
used to distribute rewards. The two key elements of procedural justice are:
Vroom's Expectancy Theory. This widely accepted explanation of motivation deals with a
coupling of three beliefs. The belief that (1) effort will lead to a good performance appraisal, (2)
good appraisals will lead to organizational rewards, and (3) organizational rewards will satisfy
the employee's personal goals. The relationship between these three beliefs and the strength of
the links between them are the focus of this theory.
The Three Key Relationships:
e. Effort-Performance Relationship. Defined as the probability perceived by the

individual that exerting a given amount of effort will lead to successful
performance. If the employee believes that effort will not result in successful
performance or that the performance will not be accurately reflected in the
performance appraisal, little effort will be expended.
f. Performance-Reward Relationship. The degree to which the individual believes

that performing at a particular level will lead to the attainment of a desired
outcome. Unless the relationship between strong performance appraisals and
rewards is clear, little effort will be expended to achieve those high appraisal
marks.
g. Rewards-Personal Goals Relationship. The degree to which organizational

rewards satisfy an individual's personal goals or needs and the attractiveness of
those potential rewards for the individual. Unless organizational rewards are
tailored to individual employee wants and needs, they will not be very
motivational and little effort will be expended.
Four ways to increase self-Efficacy:
A. Enactive mastery:gainig relevant experience with task

B. Vicarious modeling: becoming more confident because another person is observed
doing the task.
C. Verbal persuasion: Confidence gained because another person convince the target
individual

Chapter Five
Management of Organizational Conflict and Negotiation
5.1 Definition and Concept of Conflict
Definition. There are many definitions for conflict. But there are three common
themes:
Perception. Conflict must be perceived by the parties to it, if no one is aware

of a conflict, then generally it is agreed that no conflict exists.
Incompatibility. The parties must be in opposition or have incompatible goals

or desires in order for conflict to exist.
Interaction. In order for there to be conflict, the parties must be able to

interact with each other.
5.2 DIFFERENT VIEWS IN CONFLICT THOUGHT
There are three schools of thought relating to conflict in organizations. These have
developed historically from the view that all conflict in organizations is inherently bad
(the traditional view) through the idea that conflict is natural and inevitable (the human
relations view) to the most recent idea that conflict is absolutely necessary for groups
to perform effectively (the interactionist view).
A. The Traditional View. In the earliest approach (1930s through 1940s) to

conflict in organizations, it was assumed that all conflict was harmful and
needed to be avoided. Conflict was seen as a dysfunctional outcome resulting
from poor communication, a lack of openness and trust between people, and
the failure of managers to be responsive to the needs and aspirations of their
employees. This somewhat simplistic view of conflict allowed for relatively
easy solutions: seek out the sources of conflict and correct those malfunctions.
While still commonly held in the workplace, this view is not aligned with
modern research findings.
B. The Human Relations View. This view dominated conflict theory from the
late 1940s to the mid-1970s. The belief was that conflict is a natural
occurrence in all groups and organizations and as such, should be accepted
rather than removed. Proponents claimed that conflict may even benefit a
group’s performance.

E. The Interationist View. This most recent view of conflict moves beyond
accepting conflict in groups and organizations to actively encouraging it. It is
believed that encouraging group leaders to maintain an ongoing minimum level of
conflict keeps groups viable, self-critical, and creative. Not all conflict is to be
encouraged however, there are two main categories:
1. Functional Conflict. These are conflicts that support the goals of the group and
improve its performance: it is constructive.
2. Dysfunctional Conflict. These are conflicts that hinder group performance: it is

destructive.
Assessing Conflict. In order to determine if conflict is functional or dysfunctional,

managers must examine the type (or relevant types) of conflict in the situation.
a. Task Conflict. This type of conflict relates to the content and goals of the
work. High levels of task conflict become dysfunctional when they create
uncertainty about task roles; increase the time needed to complete tasks; or
lead to members working at cross-purposes. Low-to-moderate levels of
task conflict are functional as they consistently demonstrate a positive
effect on group performance.
b. Relationship Conflict. This type of conflict focuses on interpersonal

relationships. Almost all conflict of this type is dysfunctional.
c. Process Conflict. This final type of conflict relates to how the work is
accomplished. Low levels of process conflict are functional, while
moderate-to-high levels of process conflict are dysfunctional.
5.3 THE CONFLICT PROCESS
There are five stages in the conflict process.
Stage I: Potential Opposition or Incompatibility. This indicates the presence of

conditions that create opportunities for conflict to arise. These conditions do not
need to directly lead to conflict, but one of these causes is necessary for conflict to
surface. There are three general categories of these causes or sources of conflict.
Stage II: Cognition and Personalization. If the antecedent conditions of the first
stage negatively affect something one party cares about, then the potential for
conflict becomes actualized in the second stage. One party must be aware of this

antecedent condition in order for the conflict to become actualized (“perceived”
conflict). Merely being perceived does not make conflict personalized. It is when
individuals become emotionally involved, that conflict becomes personalized and
the parties experience anxiety, tension, frustration, or hostility. This is known as
“felt” conflict.
Stage III: Intentions. Intentions are decisions to act in a given way. People's
perceptions and emotions are focused by their intentions into their overt behavior.
But behavior does not always accurately reflect a person's intentions. Because one
party must infer the other party’s intent in order to know how to respond,
intentions are critical in the management of conflict. Many conflicts become
escalated because one party attributes the wrong intentions to the other party.
Stage IV: Behavior. This is the visible stage of conflict. It includes statements,
actions, and reactions made by the conflicting parties. These behaviors are usually
overt attempts to implement each party's intentions. The conflict behaviors
themselves act as a stimulus to the other party, often in unintended ways.
Stage V: Outcomes. The behaviors given in Stage IV result in consequences, i.e.,

functional or dysfunctional outcomes.
Functional Outcomes. Normally associated with low-to-moderate levels of task and

process conflict, these outcomes result in an improvement in the group's
performance.
Functional Outcome Indicators. Conflicts can be considered to have functional outcomes

when any of the following end-conditions exist:
1) The quality of decisions is improved by allowing multiple points of view to be

considered.
2) Creativity and innovation are stimulated by challenging the status quo.
3) Interest and curiosity among group members is encouraged.
4) Problems are aired and tensions are released.
5) An environment of self-evaluation and change is created.
Research Results. Studies in diverse settings confirm the functionality of conflict and its
ability to increase group performance. Additionally, heterogeneous groups (those with a
greater likelihood for conflict than homogenous groups) were also found to produce
higher-quality solutions.

Dysfunctional Outcomes. Uncontrolled opposition breeds discontent, which acts to
dissolve common ties, and eventually leads to the destruction of the group.
Dysfunctional Outcome Indicators.
6) Group effectiveness is reduced.
7) Group communication is retarded.
8) Group cohesiveness is reduced.
9) Group goals are subordinated to infighting among members.
10) The group is threatened with destruction.
d. Research Results. A substantial body of the literature has shown that

dysfunctional conflict to reduce group effectiveness.
5.4 CONFLICT HANDLING TECHNIQUES/STRATEGIES
NEGOTIATION
Negotiation is often the means to resolve conflict. Negotiation is becoming far more
common at all levels: it has been said that life itself is a series of small negotiations.
Definition: negotiation is a process in which two or more parties exchange goods

or services and attempt to agree on the exchange rate for them. It is synonymous
with bargaining.
Bargaining Strategies. There are two general approaches to negotiation:

distributive bargaining and integrative bargaining.
Distributive Bargaining. This type of bargaining operates under zero-sum (or

“fixed pie”) conditions: one party’s gains reflect losses by the other.
Distributive Bargaining Zones. This model reflects zero-sum distributive

bargaining positions. Each party is a negotiator.
Negotiation Process. This simplified model of the negotiation process is composed of

five steps.
Step One: Preparation and Planning. Negotiators must prepare for the conflict by:

Step Two: Definition of Ground Rules. In this initial stage of negotiations, the
methodology of the negotiation itself is determined. The step determines the who,
what, when, and how of the negotiation process. The initial proposals or demands
will be exchanged between the parties.
Step Three: Clarification and Justification. In this step each party will explain,
amplify, clarify, bolster, and justify the original demands or proposals. This step
should be more explanatory in nature, rather than confrontational; it should be used
to build understanding between the parties.
Step Four: Bargaining and Problem Solving. This step is what is typically thought
of as negotiations. It is the actual give-and-take necessary to accomplish
agreement. It is likely that both parties will have to make some concessions in
order to reach agreement.
Step Five: Closure and Implementation. The final step in the process is formalizing
the negotiated agreement and developing any necessary procedures for
implementing and monitoring that agreement. This step can be accomplished by
anything from creating a formal contract through simply shaking hands on it.
Individual Differences in Negotiation. There are three characteristics that can

affect negotiation ability in individuals.
Personality. There is little evidence to support the idea that personality can predict
negotiation ability. However, it may be that several of the Big Five traits are related
to negotiation outcomes.
Gender. While men and women do not tend to negotiate differently, the negotiation
outcomes do differ based on gender.
Men have been found to negotiate better outcomes than do women, although the
difference is relatively small.
Cultural Differences. Negotiating styles clearly vary across national cultures. The
cultural context of negotiation significantly influences:

IMPLICATIONS FOR MANAGERS
Managing Conflict. While this chapter has shown that conflict can be helpful in
increasing organizational outcomes, managers may be faced with excessive
conflict and need to reduce it. These are some guidelines for handling conflict:
Competition. Use this method when:
e. Quick, decisive action is vital (emergencies).
f. Deciding important issues for which unpopular actions need to be

implemented (such as cost cutting and discipline).
g. Deciding issues vital to the organization's welfare when you know you are
right and your opponents are wrong.
h. Negotiating with people who take advantage of noncompetitive behavior.
Collaboration. Use this method when:
i. There is a need to find an integrative solution when both sets of concerns

are too important to be compromised.
j. Your objective is to learn.
k. The desire is to merge insights from people with different perspectives.
l. Wishing to gain commitment by incorporating concerns into a consensus.
m. Working through feelings that interfered with the relationship.
Avoidance. Use this method when:
n. The issue is trivial, or when issues that are more important are pressing.
o. You perceive no chance of satisfying your concerns.
p. The potential disruption outweighs the benefits of resolution.
q. You desire to let people cool down and regain perspective.
r. Gathering information supersedes the need for an immediate decision.
s. Others can resolve the conflict more effectively.

t. Issues seem tangential or symptomatic of other issues.
Accommodation. Use this method when:
a. You find you are wrong and wish to allow a better position to be heard in order to learn and to
show your reasonableness.
b. Issues are more important to others than to yourself and you wish to satisfy others and
maintain cooperation.
c. Harmony and stability are especially important.
d. You wish to allow subordinates to develop by learning from their mistake.
Improving Negotiation Skills. The following recommendations should improve your
effectiveness in negotiating:
Set Ambitious Goals. Make an aggressive first offer.
Pay Little Attention to Initial Offers. Stick to your goals.
Research Your Opponent. This knowledge will help you better understand your
opponent's behavior, predict responses to your offers, and help you frame solutions
in terms of your opponent's interests.
Assess the Problem, Not Personalities. Concentrate on the negotiation issues not on
the personal characteristics of your opponent: separate the people from the problem.
Be Creative and Emphasize Win-Win Solutions. If conditions are supportive, look

for an integrative solution. Try to “invent” options that may make both parties
happy.

Chapter Six
Stress Management
Group Assignment
1. What is stress?
2. What are causes of stress?
3. What are stress management techniques?

Chapter Seven:
Organizational Culture and Diversity
7.1 DEFINATION OF ORGANIZATIONAL CULTURE
Defined. A system of shared meaning held by members that distinguishes the organization from
other organizations. There are seven primary characteristics that capture the essence of an
organization's culture. These characteristics are measured on a scale of high to low and provide a
composite picture of an organization's culture. This becomes the basis for the feelings of shared
understanding that members have about the organization, how things are done in it, and the way
members are supposed to behave.
Organizational Culture versus Job Satisfaction.
Organizational culture describes how employees perceive the characteristics of an organization’s

culture, not whether or not they like those characteristics. It is a descriptive term.
Job satisfaction seeks to measure affective responses to the work environment: it is concerned with
how employees feel about the organization. It is an evaluative term.
Layers of Organizational Culture. Culture is a system of shared meaning, therefore

individuals of dissimilar backgrounds or at varying levels in the organization should describe
the organization's culture in similar terms despite their differences. This doesn't mean
however that an organization's culture is completely uniform.
Dominant Culture. This is the overall organizational culture as expressed by the core values
held by the majority of the organization's members. When people are asked to portray an
organization's culture, they normally describe the dominant culture: a macro view that gives an
organization its distinct personality.
Subcultures. These subsets of the overall culture tend to develop in larger organizations to
reflect the common problems, situations, or experiences that are unique to members of certain
departments or geographical areas. The subculture retains the core values of the dominant
culture but modifies them to reflect their own distinct situation.

Strong versus Weak Cultures. Strong cultures have a greater impact on employee behavior
and are more directly related to reduced turnover.
Strong Culture. This exists when an organization's core values are both intensely held and
widely shared. The greater the number of members who accept the core values and the greater
their commitment to these values, the stronger the culture is. A strong culture creates an
internal climate of high behavioral control and builds cohesiveness, loyalty, and organizational
commitment.
Weak Culture. In this case, the organization's core values are not widely held or intensely felt.
These cultures have little impact on member behavior.
Organizational Culture versus National Culture. National culture has a greater impact on
employee behavior than does an organization's culture. There may be self-selection biases during the
hiring process whereby companies hire people most likely to fit into their organizational culture,
rather than a person who more accurately reflects the national culture, which may make employees
more likely to follow the organizational culture than a typical person from own national culture.
Functions and Liabilities of Organizational Culture.
The Functions of Organizational Culture. Overall, culture benefits organizations by increasing

organizational commitment and the consistency of employee behavior. It also aids employees by
reducing ambiguity. There are five basic functions of culture that help achieve these benefits:
Defines Boundaries. Culture creates distinctions between one organization and another.
Identity. Culture conveys a sense of identity for its members.
Commitment. Culture generates commitment to something that is larger than one's own self-interest.
Social Stability. Culture is the social glue that helps hold the organization together by providing
appropriate standards for socially acceptable employee behavior.
Control Mechanism. Culture serves as a control mechanism that guides and shapes the attitudes and
behavior of employees. It helps employees make sense of the work environment: it defines the rules
of the game. In today's organizations, where direct and close managerial control appears to no longer
be an option, culture is one of the ways to enforce organizational standards and to maintain
effectiveness.
Culture as a Liability. Because culture is difficult to change in the short run and defines proper
behavior, it may create barriers in the organization.

Barrier to Change. When the cultural values are not aligned with those that will
increase an organization’s effectiveness in dynamic environments, they can create a
barrier to implementing the necessary organizational changes.
Barrier to Diversity. There is a managerial conflict that exists because of culture.

Organizations seek to hire people of diverse backgrounds in order to increase the
quality of decision-making and creativity. But strong cultures, by their very nature,
often seek to minimize diversity. Balancing the need for diversity with the need for a
strong culture is an ongoing managerial challenge.
Barrier to Acquisitions and Mergers. One of the primary concerns in mergers and
acquisitions in recent years has been the cultural compatibility between the joining
firms as the main cause for the failure of these combinations has been cultural conflict.
CREATING AND SUSTAINING CULTURE
The Creation of Culture. The ultimate source of an organization's culture is its founder(s).
Founders have a vision of what the organization should be and they are unconstrained by previous
customs or ideologies. The new organization's small size facilitates the founder’s imposition of his or
her vision on all organizational members. Founders create culture in three ways:
Employees Selection. Founders hire and keep only those employees who think and feel the
same way the founders do.
Socialization. Founders indoctrinate and socialize their employees toward the founders’ way
of thinking and feeling.
Modeling. The founder acts as a role model and encourages to employees identify with him or
her and to internalize the founder’s beliefs, values, and assumptions. Any organizational
success is attributed to the founder’s vision, attitudes, and behavior. In a sense, the
organization becomes an extension of the founder’s personality.
Sustaining Culture. Once a culture exists, OB practices within the organization serve to
maintain it by giving employees a similar set of experiences. These practices include the
selection process, performance evaluation criteria, training and development activities, and
promotional procedures: those who support the culture are rewarded and those who do not are
penalized.
Employee Selection. The selection process needs to identify potential employees with relevant
skill sets; one of the more critical facets of this process is ensuring that those selected have
values that are consistent with those of the organization. Employees whose values and beliefs
are misaligned with those of the organization tend to not be hired, or self-select out of the
applicant pool.

Actions of Top Management. The verbal messages and actions of top management establish
norms of behavior throughout the organization. These norms include the desirability of risk
taking, level of employee empowerment, appropriate attire, and outlining successful career
paths.
Employee Socialization. New employees must adapt to the organizational culture in a process
called socialization. While socialization continues throughout an employee's career, the initial
socialization is the most critical. There are three stages in this initial socialization. The
success of this socialization will affect employee productivity, commitment, and turnover.
Prearrival. This encompasses all the learning that occurs before a new member joins
the organization. Each individual arrives with his or her own unique set of values,
attitudes, and expectations both surrounding the work and the organization. That
knowledge, plus how proactive their personality is, are the two critical predictors of
how well the new employees will adjust to the new culture.
Encounter. This is when the new employee sees what the organization is really like
and confronts the possibility that expectations and reality may diverge. If the
employee's expectations prove to be reasonably accurate, the encounter stage merely
provides a reaffirmation of the perceptions gained earlier. But when expectations and
reality differ, new employees must undergo socialization that will detach them from
their previous assumptions and replace them with another set the organization deems
desirable. At the extreme, a new member may become disillusioned with the
actualities of the job and resign: an indication of the failure of the selection process.
The greater the number of friendship ties a newcomer has in the organization, the more
likely he or she is to be committed.
Metamorphosis. In this final stage, relatively long-lasting changes take place as the
employee has adjusted to the work itself and internalized the workgroup’s values and
norms. The more management relies on socialization programs that are formal,
collective, fixed, serial, emphasize divestiture, the greater the likelihood that the
newcomer’s differences and perspectives will be stripped away and replaced by
standardized and predictable behaviors. Successful metamorphosis should have a
positive effect on new employee productivity, organizational commitment, and
turnover.
Culture Creation Model. The original culture is derived from the founder's philosophy, which in
turn strongly influences the criteria used in hiring. The actions of top management set the general
climate of what is acceptable behavior. How well employees are socialized will depend on
management’s selection of socialization method and the closeness of the new employees’ values to
those of the organization.

HOW CULTURE IS LEARNED
Transmission. Culture is transmitted to employees in a number of forms: stories, rituals,

material symbols, and language.
Stories. Stories typically revolve around key events such as rule breaking, unlikely successes,
workforce reductions, reactions to past mistakes, and methods of organizational coping that
involve the organization's founders or other key personnel. These are morality tales: the stories
are designed to teach lessons of how things should be done in the organization.
Rituals. These are repetitive sequences of activities that express and reinforce the key values
of the organization. These rituals run the gambit from simple public “attaboys” to formal
retirement ceremonies.
Material Symbols. Material symbols such as the size of offices, the elegance of furnishings,
perquisites, awards and trophies, and the attire worn, all convey to employees who is
important, the degree of egalitarianism desired by top management, and the kinds of
appropriate behavior.
Language. Specialized languages, acronyms or jargon serve as a means to identify and

segregate members of a culture or subculture. Once assimilated, the specialized language acts
as a common denominator that unites members of a given culture or subculture
7.4 MANAGING CULTURAL CHANGE
The Difficulty of Cultural Change Culture is relatively stable and rooted in the deeply held
values to which employees are strongly committed. Culture is embedded in every aspect of
the organization. While changing an organization's culture may be difficult, there are times
when it is necessary. Four conditions indicate when the organizational environment is ripe for
change:
A Dynamic Crisis Exists or Is Created. Crises such as a surprising financial setback, the loss
of a major customer, or a dramatic technological breakthrough by a competitor may act as a
shock that undermines the status quo and calls into question the relevance of the current
culture. Some executives purposely create a crisis in order to stimulate cultural change.
A Turnover in Leadership. Replacing top leadership with people from outside the organization
can provide an alternative set of key values and is likely to increase the chances that new
cultural values will be introduced.
Younger and Smaller Organizations. These organizations have less-entrenched cultures; their
cultures are easier to change than are those of larger and better-established organizations.

Weaker Cultures. The stronger a culture of the more difficult it will be to change. Weak
cultures are relatively easy to change.
Cultural Change Timeline. Even if these factors are favorable, cultural change is a lengthy
process should be measured in years rather than months.
CREATING AN ETHICAL ORGANIZATIONAL CULTURE.
Favorable Conditions. A strong organizational culture that is high in risk tolerance, low-to-
moderate in aggressiveness, and focuses on means as well as outcomes is the one most likely
to shape high ethical standards.
Practices that Encourage Development of an Ethical Culture. Top management can:
Be a Visible Role Model. When senior management is seen as taking the ethical highroad, it
provides a positive behavioral guideline for all employees.
Communicate Ethical Expectations. The creation and use of an organizational code of ethics
helps reduce ethical ambiguities and enforce the organization's primary values.
Provide Ethical Training. Training acts to reinforce the organization’s standards of conduct,
clarifies ethical practices, and addresses possible ethical dilemmas.
Visibly Reward Ethical Acts and Punish Unethical Ones. Performance appraisals must include
the means taken to achieve goals as well as the ends themselves. Employees tend to act in
ways that will gain them the greatest rewards (see Expectancy Theory in Chapter 5): tie ethical
actions into the reward structure to modify behaviors.
Provide Protective Mechanisms. Organizations must create formal mechanisms that allow
employees to discuss ethical dilemmas or report unethical behavior without fear of reprimand
(such as ethical counselors, ombudsman, or ethical officers) to facilitate the change to an
ethical culture.
CREATING A CUSTOMER-RESPONSIVE CULTURE
Purpose. Creating an organizational culture that builds a strong and loyal customer base is
generally rewarded with revenue growth in better financial performance.
Key Variables in Shaping Customer-Responsive Cultures.
Type of Employees. Successful, service-oriented organizations hire employees who are

outgoing and friendly.

Low Formalization. Service employees need to have the freedom to meet changing customer-
service requirements. Rigid rules, procedures, and regulations make this difficult.
Widespread Use of Empowerment. Related to low formalization, employees need discretion to

do what is necessary to please the customer.
Good Listening Skills. Employees must have the ability to listen and understand messages sent
by the customer.
Role Clarity. Service employees act as “boundary spanners” between the organization and its
customers. They have to please both management and customers, which may lead to role
ambiguity and conflict, reducing job satisfaction and hindering performance. Managers should
clarify employee roles as to the best way to perform the jobs and activities.
Organizational Citizenship Behavior. Employees should be conscientious in their desire to

please the customer. They need to be able to take initiative to provide service beyond customer
expectations.
Suggested Managerial Actions. To create a more customer-responsive culture, managers

should do the following:
Selection. Building a customer-responsive culture starts with hiring the correct service contact
people. Organizations should seek personalities and attitudes consistent with a high service
orientation.
Training. Organizations with large numbers of existing employees should focus on training.
The training should encompass improvement of product knowledge, active listening, showing
patience, and displaying emotions.
Structural Design. Organizations that wish to become customer-oriented should reduce the
numbers of rules and regulations so that employees are empowered to change their behavior to
meet the needs and requests customers.
Empowerment. Employees should be given discretion to make day-to-day decisions about job-
related activities. As with structural design, this allows customer service representatives to
satisfy consumers completely and immediately.
Leadership. Leaders must model customer-centric behaviors if they wish their employees to
act responsively toward their customers.
Performance Evaluation. Behavior-based performance evaluations are consistent with

improved customer service. The focus of such appraisals is based of how employees behave or

act (effort, commitment, teamwork, friendliness, and problem solving) rather than on
measurable outcomes.
Reward Systems. Organizations that wish to deliver good service need to reward employees
who provide it. Pay and promotions should be contingent on outstanding customer service.
New Organizations. Creating the desired cultures in organizations is relatively easy: the
founder merely needs to model the behaviors desired and select appropriate employees.
Existing Organizations. Changing organizational culture is a time-consuming activity.

Strong cultures are relatively stable and have permanent characteristics, which may be either a
benefit or detriment to the organization depending on how dynamic their environment
becomes. Change is possible, but it takes great effort and a long-term focus.

Chapter Eight: Power and Politics in Organization
8.1 DEFINITIONS OF POWER
Power is defined as: a capacity that one person has to influence the behavior of
another so that the other acts in accordance with the first person's wishes.
Two Facets of Power. When it comes to power:
Potential. Power’s potential need not be actualized to be effective. It may exist

even if not used.
Dependency. Power requires a dependency relationship: the greater the

dependency, the greater the power that exists. Dependence is based on alternatives
and desirability.
8.2 CONTRASTING LEADERSHIP AND POWER
Similarities. The concepts of leadership and power are closely intertwined. Leaders use
power as a means of attaining group goals.
Differences. Power and leadership differ in three major areas:
Goal Compatibility. Power does not require goal compatibility, merely dependence.
Leadership requires some congruence between the goals of the leader and those being led.
Direction of Influence. Leadership focuses on the downward influence over one's

followers. It minimizes the importance of lateral and upward influence patterns. Power is
concerned with all directions of influence.
Research Emphasis. Leadership research tends to emphasize the style leaders take.
Research on power is a broader topic and focuses on tactics for gaining compliance.
Power research looks at the power exerted by individuals, as well as that used by groups.
BASES OF POWER/TYPES OF POWER

Groupings. There are two general groupings of power sources: formal and
personal.
Formal Power. This source of power comes from an individual's position in an

organization. It is based on the ability to coerce or reward, or from formal
authority.
1. Coercive Power. This power base is driven by fear. A target reacts to

this power out of fear of the negative results that would occur if one
fails to comply. It rests on the application, or threat of application, of
physical sanctions (pain, frustration, or threatening lower order needs).
Sexual harassment is a form of coercive power that is likely to occur
when there are large power differentials in the organization.
2. Reward Power. The opposite of coercive power, this source of power
is based on producing positive benefits for the target who complies.
Rewards can be financial or nonfinancial (recognition, interesting
assignments, or preferred work shifts).
3. Legitimate Power. In formal groups and organizations, this common
base of power is the formal authority to control and use organizational
resources based on structural position. It is based on member
acceptance of the position, not of the person filling the position.
Personal Power. This power stems from an individual's unique
characteristics. There are two bases of personal power:
4. Expert Power. This is influence wielded as a result of expertise,
special skill, or knowledge. This has become a powerful source of
influence as the world becomes more technologically oriented.
5. Referent Power. This power is based on identification with a person
who has desirable resources or personal traits. It develops out of
admiration of another and the desire to be like that person: followers
wish to please a person with referent power. This source of power is
closely aligned with charisma.
Which Bases of Power Are Most Effective?
i. Personal Power. Both expert and referent power are

positively related to employee satisfaction with
supervision, organizational commitment, and
performance.
ii. Formal Power. Reward and legitimate power are

unrelated to organizational outcomes. Coercive power is

negatively related to employee satisfaction and
commitment.
POWER TACTICS
Defined. Unlike bases of power, which are relatively fixed (at least in the short run),
power tactics are methods any one could use in any situation to influence others. Power
tactics are not necessarily linked with any given basis of power.
Nine Influence Tactics:
1) Legitimacy. Relying on one's positional authority or stressing the request is in

accordance with organizational policies and rules.
2) Rational Persuasion. Presenting logical arguments and factual evidence to
demonstrate the request is reasonable.
3) Inspirational Appeals. Developing emotional commitment by appealing to a
target’s values, needs, hopes, and aspirations.
4) .Consultation. Increasing the target’s motivation and support by involving him or
her in deciding how the plan or change will be done.
5) Exchange. Rewarding the target with benefits or favors in exchange for following
a request.
6) Personal Appeals. Asking for compliance based on friendship or loyalty.
7) Ingratiation. Using flattery, praise, or friendly behavior prior to making the
request.
8) Pressure. Using warnings, repeated demands, and threats.
9) Coalitions. Enlisting the aid of other people to persuade the target or using the
support of others as a reason for the target to agree.
Tactic Effectiveness. Not all tactics are equally effective.
iii. Effective Tactics. Rational persuasion, inspirational

appeals, and consultation tend to be the most effective
tactics. Typically, these “softer” tactics are more
effective than “harder” tactics (exchange, coalitions, and
pressure).
iv. Ineffective Tactics. Pressure is the least effective of all

nine tactics.
v. Combining Tactics. Effectiveness is increased by using

more than one type of tactic at the same time or
sequentially, so long as the tactics are compatible.

vi. The Impact of Influence Direction. Tactic effectiveness
is modified by the direction of the influence.
1. Downward. Inspirational appeals and pressure

work best as downward influencing tactics.
2. Lateral. Personal appeals and coalitions are most

effective as lateral influence attempts.
3. Upward. The only tactic that is effective across

all organizational levels is rational persuasion.
Other Influences. The sequencing of tactics, a person’s skill in using a tactic, a person's
relative power, the type of request and how the request is perceived, the culture of the
organization, and country-specific cultural factors all impact the effectiveness of power
tactics. Power tactics are more likely to be successful if the target perceives it to be a
socially acceptable form of influence behavior.
Sequencing of Tactics. The most effective method to use is to begin with the “softer”
tactics that rely on personal power (personal inspirational appeals, rational persuasion, and
consultation) before moving to “harder” tactics that emphasize formal power and involve
greater risks and costs (exchange, coalitions, and pressure).
POWER IN GROUPS: COALITIONS
Coalition: defined as an informal group bound together by the active pursuit of a single
issue. Successful coalitions have been found to contain fluid membership and are able to
form swiftly, achieve their target issue, and quickly disappear. Coalitions are often
formed when personal power is lacking.
Predictions Regarding Coalition. There are number of predictions that can be made
about the creation of coalitions.
Size. Coalitions in organizations often seek to maximize

their size. It is necessary for coalitions in organizations to
seek a broad constituency to support the coalition’s
objectives from decision through implementation.
Degree of Interdependence. More coalitions are likely

to be created when there is a great deal of task and
resource interdependence.

Routineness of Task. The more routine the group’s tasks
are, the greater the likelihood that coalitions will form.
Because tasks are routine, workers are easily substituted
for one another and thus the greater their dependence
upon the organization. To offset this increased
dependence, workers often form coalitions such as labor
unions.
POLITICS: POWER IN ACTION
Definition: Politics occurs when employees convert their power into action. Employees
with good political skills have the ability to use their bases of power effectively.
Political Behavior. Defined as activities that are not required as part of one's formal role
in the organization, but that influence, or attempt to influence, the distribution of
advantages and disadvantages within the organization. This definition includes three key
points:
Outside of Job. Political behavior is outside one’s

specified job requirements.
Use of Power. The behavior requires some attempt to

use one's power bases.
Effects on Decision-Making. Encompasses efforts to

influence the goals, criteria, or processes used for
decision-making.
Factors Contributing to Political Behavior. There are a number of factors that appear to
encourage political behavior: some are individual characteristics and others are the results
of the organization's culture or internal environment.
Individual Factors.
Traits. Employees who are high self-monitors, possess an internal locus of control, and
have a high need for power are more likely to engage in political behavior.
Situational Factors. There are three situational factors that influence the degree to which a
person will pursue illegitimate political actions.
The greater an individual's investment is in the organization, the lower the likelihood that
person will engage in illegitimate political actions.

The greater the number of perceived alternatives (e.g., other job offers), the greater the
likelihood of illegitimate actions occurring.
The greater the individual's expectations of success for the illegitimate action, the more
likely the illegitimate action will be taken.
Organizational Factors. This is the most influential set of factors leading to political
behavior.
Organizational Resources. When an organization’s resources are declining or when the

existing patterns of resource distribution are changing, the likelihood of political behavior
increases. This is especially true in periods of downsizing.
Promotions. The availability of promotions is one of the most political aspects of any
organization and is most likely to cause political behavior.
Organizational Culture. Cultures evidencing the following characteristics are more likely
to experience political behaviors.
Performance evaluation systems that are unclear, subjective, focused on one outcome
measure, have long delays between action and appraisal, and/or are ambiguous.
Low levels of trust (also increases the likelihood of illegitimate political actions).
The more ambiguous a worker’s role, the fewer limits there are to the scope and functions
of the employee’s political actions.
The use of zero-sum or win-lose reward allocation practices, which forces employees to
compete with each other for a limited reward.
Frequent democratic decision-making, which by its very nature requires the use of
politics.
When there are high pressures for performance, especially when employees are held
strictly accountable for outcomes and have great pressure upon them to look “good.”
When the firm is being led by poor example: self-serving senior managers who use
political behaviors make such behavior acceptable throughout the organization.
Responses to Organizational Politics. For most people, those who have modest political
skills or who are unwilling to play the politics game, the outcomes of working in
politicized environments tends to be predominately negative. Perceptions of
organizational politics are negatively related to job satisfaction, and may increase turnover
or decrease performance. This is not a universal outcome, there are some qualifiers:

The Level of Political Understanding. When levels of political understanding are high
(when people understand how the organizational politics work), performance is likely to
increase in organizations with high levels of politics. But when levels are low in
politicized organizations, individuals are more likely to see politics as a threat, which has a
negative impact on job performance.
Threat Perception. When politics is seen as a threat and consistently responded to with
defensive behaviors (reactive and protective behaviors to avoid action, blame, or change),
negative feelings toward the job and work environment will arise.
National Culture. While the results are still tentative, it appears that workers in politically
stable countries dislike politics in their organizations, while those in unstable countries are
more accepting of political behaviors in their organizations.
Impression Management (IM). Defined as the process by which individuals attempt to

control the impersonation others form of them. High self-monitors tend to be those most
concerned with IM. They are good at reading situations and molding their appearances
and behavior to fit each situation.
The Seven Impression Management (IM) Techniques:
1. Conformity: agreeing with someone else's opinion in order to gain his or her
approval.
2. Excuses: explanations of our predicament-creating event aimed at minimizing the
apparent severity of the predicament.
3. Apologies: admitting responsibility for an undesirable event and simultaneously
seeking to get a pardon for the action.
4. Self-Promotion: highlighting one's best qualities, downplaying one's deficits, and
calling attention to one's achievements.
5. Flattery: complementing others on their virtues in an effort to make one appear
perceptive and likable.
6. Favors: doing something nice for someone to gain that person's approval.
7. Association: enhancing or protecting one's image by managing information about
people and things with which one is associated.
Misrepresentation. While IM does not necessarily imply misrepresentation of a person, it

is a possibility. Those who misrepresent themselves may be discredited when perceived
as insincere or manipulative. Situations characterized by high uncertainty or ambiguity
increase the likelihood of intentional misrepresentation.
Ethical Guidelines for Political Behavior. While there are no clear-cut standards to
differentiate ethical from unethical politicking, answering the following questions may

prove helpful. Realize however that the answers to these questions are often argued in
ways to make unethical practices seem ethical. This is especially true for powerful people
who are ego-driven.
What is the utility of engaging in the behavior?
How does the utility of engaging in the political

behavior balance out any harm (or potential harm) it will
do to others?
Does the political activity conform to the standards of

equity and justice?
In order to accomplish things in a group or organization, it helps to have power. Power

can be increased through the following techniques:
Increasing the dependence of other people on the person desiring power.
Gaining unique knowledge or skills that are necessary in the organization.
Person desiring power should seek to minimize his or her dependence on others.
Acquire useful bases of power (expert and referent).
Use effective power tactics (consultation and inspirational appeal).
Avoid using coercion and other tactics that may result in resistance and resentment in
others.
Accept the political nature of organizations and understand it in order to formulate

advantageous political strategies.

Chapter Nine: Organizational Design and Structure
9.1 DEFINATIONS OF ORGANIZATIONAL DESIGN

AND STRUCTURE
Organizations are made up of more than one person. In order to be effective, these
people must be able to work together in such a way that each adds to the work of the
other without taking anything away. The solution to this problem is structure.
ORGANIZATIONAL STRUCTURE
Definition. An organizational structure defines how job tasks are formally divided, grouped,
and coordinated. There are six key elements used to determine the proper structure for an
organization: work specialization, departmentalization, chain of command, span of control,
centralization and decentralization, and formalization.
Six Key Structural Elements.
Work Specialization. Also known as division of labor, this is the degree to which activities in
the organization are subdivided into separate jobs. The essence of work specialization is that
an entire activity is broken down into a number of steps, with each step (job) being
completed by a separate individual, rather than one individual completing the entire activity.
4. Benefits of Increasing Work Specialization.

Breaking activities into the smallest and simplest
tasks and combining these into jobs provided a
number of benefits.
a. Greater work efficiency: workers could be

matched to jobs based on their skill levels.
Employee skills gained by performing a task
successfully increased through repetition.
Less time was spent switching from task to
task in a given job.
b. Lower costs: organizations do not have to

pay for higher-level skills that are not
utilized on the job.

c. Greater training efficiency: it is easier and
less costly to find and train workers for
specific and repetitive tasks. This is
especially true of highly sophisticated and
complex operations.
d. Encourages the creation of specialized

equipment: the increased efficiency and
productivity gained through work
specialization freed up capital. That allowed
for the creation of labor saving specialized
equipment and inventions.
5. Costs of Increasing Work Specialization. When

work specialization is carried too far, the human
costs of specialization, (boredom, fatigue, stress,
low productivity, poor quality, increased
absenteeism, and high turnover), more than offset
the economic advantages.
6. Job Enlargement. In situations where increased

work specialization had decreased productivity,
organizations found that adding new or various
tasks, even to the point of complete work packages,
to a job’s scope increased productivity. When
workers with interchangeable skills were placed on
work teams, they often achieved significantly
higher output and increased employee satisfaction.
Departmentalization. This is the basis by which jobs are grouped together so that common
tasks can be coordinated. Jobs can be grouped on a number of bases: functional, product,
geography, process, consumer or any reasonable combination of these bases. A recent
organizational trend is to emphasize the use of cross-functional teams, where members are
pulled from specialized departments into a common team (see Chapter 9).
7. Functional. One of the most popular ways to group

jobs is by the functions performed. Functional
departmentalization seeks to achieve economies of
scale by placing people with common skills and
orientations into common units.

8. Product. Workers can be organized by the type of
product the organization produces. This type of
grouping provides the major advantage of increased
accountability for product performance, since all
activities related to a specific product are under the
direction of a single manager.
9. Geography. Departments can be built based on

geography or territory. If an organization's
customers are scattered over a large geographic area
and have similar needs based on their location, then
this form of departmentalization can be valuable.
10. Process. Each department specializes in one

specific phase in the production as each phase
requires different skills; this method offers a basis
for homogenous categorizing of activities.
11. Customer. The assumption underlying customer

departmentalization is that the various groups of
customers have common sets of problems and needs
that can best be met by having specialists for each
type of customer.
Chain of Command. This describes the unbroken line of authority that extends from the top
of the organization to its lowest echelon and clarifies who reports to whom. While it has
become less important in recent years, it still is a valid concern when structuring
organizations.
Authority. This refers to the rights inherent in a managerial position to give orders and
expect the orders to be obeyed. Typically, the level of authority is matched to the
responsibilities of a given position.
Unity-of-Command. This principle helps preserve the concept of an unbroken line of

authority: it states that a person should have one and only one superior to whom the person is
directly responsible. While this principle is often broken in modern organizations, the result
may be increased conflicting demands or priorities given to workers.
Span of Control. This is the number of employees a manager is expected to effectively and
efficiently direct (often known as the number of “direct reports”). This span, to a large
degree, determines the number of levels and managers an organization has.

12. Wide/Large Span of Control. All other things being
equal, the wider or larger the span, the more cost-
efficient the organization. Managerial effectiveness
however, may be diminished by larger spans of
control.
a. The use of wider spans of control has

become more prevalent in recent years due
to the desire to reduce costs, cut overhead,
speed up decision-making, increase
flexibility, get closer to customers, and
empower employees by reducing the
number of managerial layers in an
organization.
b. Wider spans of control do increase training

costs as workers must be much more
knowledgeable about their jobs in order to
allow managers to reduce the closeness of
control.
13. Narrow/Small Span of Control. Keeping the span

of control to five or six employees allows for close
control by management. But there are three
potential drawbacks:
a. Increased costs due to the additional levels

of management.
b. Vertical communication in the organization

becomes more complex and slower. Larger
hierarchies tend to slow the decision-making
process down and may isolate upper
management.
c. Overly tight supervision may discourage

employee autonomy.
Centralization and Decentralization. This refers to the degree to which decision-making is

concentrated at a single point in the organization. The concept only includes formal
authority: the rights inherent in one's position.

14. Primary Difference. Centralized organizations have
all key decisions made at the upper levels of the
organization while decentralized organizations have
decisions made at the lowest possible level.
15. Benefits of Decentralization. The current trend in

organizations is toward decentralization, in order to
get the following benefits:
a. Actions tend to be taken more quickly to

solve problems.
b. More people provide input into decisions.
c. Employees are less likely to feel alienated

from those who make decisions that affect
their work lives.
Formalization. This is the degree to which jobs in the organization are standardized.
16. Formal Organizations. In these organizations, the

job incumbent has a minimum amount of discretion
over what is to be done, when it is to be done, and
how it is to be done. There is consistent and
uniform output driven by explicit job descriptions,
organizational rules, and clearly defined procedures.
17. Informal Organizations. Here job behaviors are

relatively non-programmed employees have a great
deal of freedom to exercise discretion in their work.
This may increase job motivation, employee
satisfaction, and consideration of alternative means
of completing tasks.
COMMON ORGANIZATIONAL DESIGNS
Simple Structure. The structure has a low degree of departmentalization, wide spans of
control, authority is centralized in a single person, and there is little formalization. Simple
structures tend to be “flat” organizations, with only two or three vertical levels. Often used
for small organizations and organizations in times of temporary crises.

vii. Advantages. The strength of the structure is its simplicity:
it's fast, flexible, and expensive to maintain.
Accountability is clear.
viii. Disadvantages. The structure is difficult to maintain for

anything other than small organizations. The focus of all
decision-making on one person can result very quickly in
information overload as the organization increases in size.
Bureaucracy. Standardization is the key concept that underlies all bureaucracies.

Bureaucracies are characterized by routine operating tasks achieved through specialization,
formalized rules and regulations, tasks that are grouped into functional departments,
centralized authority, narrow spans of control, and decision-making that follows the chain of
command.
ix. Advantages. Bureaucracies can perform standardized

activities in a highly efficient manner due to economies of
scale, minimum duplication of personnel and equipment,
and specialized employees. They do not require talented
low- to mid-level managers: the formalized rules and
procedures are substitutes for managerial discretion.
x. Disadvantages. Bureaucracies tend to create subunit

conflicts due to specialization of workers and departments.
Functional unit goals can override the overall goals of the
organization. There tends to be an obsessive concern with
following the rules and little ability to react to unique
situations.
Matrix Structure. This organizational structure combines two forms of

departmentalization: functional and product. The most obvious structural characteristic of a
matrix is that it breaks the unity-of-command concept. Employees in a matrix have two
bosses, (their functional department manager and their product manager), thus making a dual
chain of command.
xi. Advantages. The matrix attempts to gain the strengths of

both functional and product departmentalization while
avoiding each of their weaknesses. A matrix facilitates
coordination, especially when organizations have a
multiplicity of complex and interdependent activities. The
direct and frequent contact between different specialties in
the matrix can make for better communication; faster data

flow; more flexibility; and enhanced focus on
organizational goals instead of departmental ones. It also
facilitates the effective allocation of specialists.
xii. Disadvantages. This type of structure tends to create

confusion, foster power struggles, and place undue stress
and insecurity on individuals. Ambiguity is significantly
increased, which often leads to the greater potential for
conflict.
NEW ORGANIZATIONAL DESIGN OPTIONS
Team Structure. The primary characteristics of the team structure are that it breaks down
departmental barriers and decentralizes decision-making to the level of the work team (see
Chapter 9). Often in larger organizations, the team structure complements the overall
bureaucratic structure.
Virtual Organization. Also known as a network or modular organization, this highly

flexible structure typically features a small core organization that outsources major business
functions. It is highly centralized with little or no departmentalization. The structure allows
for the employment of highly skilled workers only for as long as they are needed (thus
reducing costs while improving quality), reduces long-term risks, and minimizes bureaucratic
overhead. This organizational option is often used by large firms who contract out the
manufacturing process or other business functions in which they do not have a competitive
advantage. Managers in virtual organizations spend most of their time coordinating and
controlling external relations, typically by way of computer-network links.
Boundaryless Organization. Also known as the T-form organization, based on its necessary
and heavy reliance on technology, this type of organization seeks to eliminate vertical and
horizontal boundaries and break down the external barriers between the company and its
customers and suppliers. The goal is to reduce internal boundaries by eliminating the chain
of command, having limitless spans of control, and replacing departments with cross-
functional and cross-hierarchical empowered teams. External barriers are removed by
globalization, strategic alliances, customer-organization links, and telecommuting.
9.2 FORCES THAT DETERMINE APPROPRIATE STRUCTURE
Models of Organizational Design. There are two extreme models of organizational design,
the mechanistic and the organic, which may aid in the discussion of these forces.

The Mechanistic Model. Generally synonymous with bureaucracy, in that it has extensive
departmentalization, high formalization, a limited information network (normally downward
communication), and little participation by low-level members in decision-making.
The Organic Model. Similar to the boundaryless organization, this structure is flat, uses
cross-hierarchical and cross-functional teams, has low formalization, possesses a
comprehensive information network (using lateral and upward communication as well as
downward), and involves high participation in decision-making.
The Four Forces That Influence Structure. An organization’s strategy, size, use of
technology and environmental uncertainty all have an influence on the appropriate structure
for the organization.
Strategy. An organization's structure is a means to help management to achieve its

objectives. Because objectives are derived from an organization's overall strategy, strategy
and structure are closely linked. Structure should follow strategy. There are three strategic
dimensions that affect structural design: innovation, cost minimization, and imitation.
Innovation. The degree to which an organization plans to introduce new products or

services. Organizations pursuing an innovation strategy need to create flexible and organic
structures.
Cost Minimization. These organizations tightly control costs, refrain from incurring
unnecessary innovation or marketing expenses, and cut price by selling a basic product.
Firms following this strategy need the efficiency and stability of the mechanistic structure.
Imitation. These organizations try to capitalize on the best of both of the previous strategies.
Imitators try to minimize risk, while maximizing the opportunity for profit. These firms are
market followers who move into new products or new markets only after viability has been
proven by the innovators. Imitators, combine both the mechanistic and organic structures:
keeping the tight control and low cost of the mechanistic structure, while creating organic
subunits to pursue new undertakings.
Organizational Size.
The size of an organization significantly affects its structure. Larger firms tend to be more
mechanistic. They develop more specialization, departmentalization, vertical levels, and
rules and regulations. But size affects structure at a decreasing rate: once an organization has
become fairly mechanistic (around 2,000 employees), additional increases in size have little
effect on organizational structure.
Technology. This generic term refers to how an organization transfers its inputs into outputs.
Technologies become focused on either routine or nonroutine activities.

Routine Technologies. Characterized by automated and standardized operations. These
technologies tend to be associated with taller and more departmentalized structures. There is
strong evidence that routine technologies are linked to highly formalized organizations that
include rules, manuals, job descriptions, and other formalized documentation
Nonroutine Technologies. These technologies are customized and associated with more
informal or organic organizations.
Environmental Uncertainty. An organization's environment is a key determinant of structure.
Static Environments. These environments have no new competitors, no new technological

breakthroughs by current competitors, or little activity by public pressure groups to influence
the organization. There is little uncertainty in these environments. Organizations in static
environments tend to take the mechanistic form.
Dynamic Environments. These environments are characterized by rapidly changing

government regulations affecting business, new competitors, difficulties in acquiring raw
materials, continually changing product preferences by consumers, and other unstable
elements. Managers are forced to contend with great deals of uncertainty in these
environments. Firms in dynamic environments require flexibility, and therefore organic
structures, in order to gain organizational effectiveness.
9.3 ORGANIZATIONAL DESIGNS AND EMPLOYEE BEHAVIOR
It is impossible to generalize any link between organizational structures and employee

performance and/or satisfaction due to the high variance caused by individual differences.
These individual differences must become the focus of the discussion.
Work Specialization. Work specialization contributes to higher employee productivity at

the price of reduced job satisfaction, but not for everyone. While the point at which the
human costs of specialized work overtakes the economies of specialization seems to be
reached more quickly now than in the past, there are still those who enjoy routine labor. The
negative behavioral outcomes from high specialization are most likely to surface in
professional jobs occupied by individuals with high needs for personal growth and diversity.
Span of Control. There is no evidence to suggest a relationship between span of control and
employee performance or satisfaction. Individual differences may be confounding the results
of research in this area. One assumption, based on several the contingency theories
(presented in Chapter 11), is that factors such as employees’ experience and abilities along
with the degree of structure in their tasks, would explain when wide or narrow spans of
control are likely to contribute to performance and job satisfaction.

Centralization. There is fairly strong evidence that the degree of centralization is linked to
job satisfaction. Decentralized organizations tend to have a greater amount of participative
decision-making, which is positively related to job satisfaction. This relationship is strongest
with employees who have low self-esteem.
Shaping Attitudes. Structure does contribute to explaining and predicting employee

attitudes. Structure reduces ambiguity and clarifies relationships. It may also shape attitudes
and motivate workers to higher levels of performance.
Behavioral Constraints. Structure constrains employee behaviors to the extent that it limits
and controls what they do. Mechanistic structures significantly restrict acceptable employee
behaviors, while organic structures provide employees a much greater freedom of action.
THE END.

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Chapter one: introduction to OB

What are organizations?

OB studies three determinants of behavior in organizations: individuals, groups, and structure. In

1. OB: Teaching material, Compiled by misir B Page 1

Systematic study of behavior means: examining relationships, attempting to attribute causes

Intuition: your “gut feelings” about “what makes others tick.”

1. OB: Teaching material, Compiled by misir B Page 2

1. OB: Teaching material, Compiled by misir B Page 3

Formal organization Group

Political science Conflict

Other disciplines contributing to the field of OB

1.5 Challenges and Opportunities for OB

Managing Workforce Diversity

1. OB: Teaching material, Compiled by misir B Page 6

Total quality management (TQM) is a philosophy of management that is driven by the

Improving People Skills

Stimulating Innovation and Coping with changes

Improving Ethical Behavior

1.6 Historical Development

1.7 Scope of Organizational Behavior

The study of Organizational Behavior facilitates the process of explaining, understanding,

1. OB: Teaching material, Compiled by misir B Page 8

A complete understanding of organizational behavior requires both an understanding of human

Open and Closed Systems

1. OB: Teaching material, Compiled by misir B Page 9

The systems view approach to management views the elements of an organization as

INPUTS TRANSFORMATION OUTPUTS

1.9 The Formal and Informal Organization

Formal organization (overt)

Figure 1.3. Formal and Informal Elements of Organizations

Examples of behavior in the informal organization are many and varied:

1. OB: Teaching material, Compiled by misir B Page 12

2.1 Definitions of Individual Behavior

The person The environment

1. OB: Teaching material, Compiled by misir B Page 13

Factors Affecting Perception

1. Characteristics of the Perceiver

1. OB: Teaching material, Compiled by misir B Page 14

Characteristics of the perceiver Characteristics of the target

1. OB: Teaching material, Compiled by misir B Page 15

2. Characteristics of the Target

Verbal and Non-verbal communication:

1. OB: Teaching material, Compiled by misir B Page 16

Barriers to Social Perception

1. OB: Teaching material, Compiled by misir B Page 17

Self-fulfilling Prophecies: Self-fulfilling prophecies are also barriers to social perception.

A. Main Components of Attitudes. There are three main components of attitudes:

“Ice cream is cold” is a cognitive statement.

1. OB: Teaching material, Compiled by misir B Page 18

Cognitive Dissonance: refers to any inconsistency that an individual might perceive

2. Job Involvement. Closely related to psychological empowerment, this attitude describes

1. OB: Teaching material, Compiled by misir B Page 19

3. Organizational Commitment. Similar to job involvement, this attitude shows how

Organizational Commitment. A state in which an employee identifies with a

Perceived Organizational Support. The degree to which employees believe the

Employee Engagement. An individual’s involvement with, satisfaction with, and

Personality Characteristics in Organizations

Self-esteem is an individual's general feeling of self-worth. Individuals with high self-esteem

A characteristic with great potential for affecting behavior in organizations is self-monitoring-