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HANDBOOK OF PRINCIPLES OF
O
RGANIZATIONAL BEHAVIOR
SECOND EDITION
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HANDBOOK OF PRINCIPLES OF
O
RGANIZATIONAL BEHAVIOR
INDISPENSABLE KNOWLEDGE FOR
E
VIDENCE-BASED MANAGEMENT
SECOND EDITION
Edited by
EDWIN A. LOCKE
A John Wiley and Sons, Ltd, Publication
ffirs.indd iv 6/17/09 3:30:51 PM
This edition first published 2009
© 2009 John Wiley & Sons, Ltd
Registered office
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United Kingdom
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Library of Congress Cataloging-in-Publication Data
Handbook of principles of organizational behavior/edited by Edwin Locke.
p. cm.
Previously published under title: The Blackwell handbook of principles of organizational
behavior/edited by Edwin A. Locke. Malden, MA: Blackwell Business, 2000.
Includes bibliographical references and index.
ISBN 978-0-470-74095-8 (cloth) — ISBN 978-0-470-74094-1 (pbk.)
1. Organizational behavior. I. Locke, Edwin A. II. Blackwell handbook of principles of
organizational behavior
HD58.7.B574 2009
658—dc22
2009019335
A catalogue record for this book is available from the British Library.
Set in 10/12pt Baskerville by Macmillan Publishing Solutions, Chennai, India
Printed in Great Britain by Antony Rowe Ltd, Chippenham, Wiltshire
ftoc.indd v 6/17/09 3:31:36 PM
Contents
Contributors and Editor ix
Preface by Denise Rousseau xv
Editor’s Introduction xxv
PART I SELECTION 1
1 Select on Intelligence 3
FRANK L. SCHMIDT
2 Select on Conscientiousness and Emotional Stability 19
MURRAY R. BARRICK AND MICHAEL K. MOUNT
3 Structure Interviews to Recruit and Hire the Best People 41
CYNTHIA KAY STEVENS
PART II TRAINING AND PERFORMANCE APPRAISAL 57
4 Design Training Systematically and Follow the Science of Training 59
EDUARDO SALAS AND KEVIN C. STAGL
5 Conduct Performance Appraisals to Improve Individual and Firm
Performance 85
MARIA ROTUNDO
ftoc.indd vi 6/17/09 3:31:36 PM
vi CONTENTS
PART III TURNOVER AND SATISFACTION 105
6 Promote Job Satisfaction through Mental Challenge
TIMOTHY A. JUDGE AND RYAN KLINGER
107
7 Control Voluntary Turnover by Understanding its Causes
MARION B. EBERLY, BROOKS C. HOLTOM, THOMAS W. LEE, AND TERENCE R. MITCHELL
123
P
ART IV MOTIVATION 143
8 Attain Emotional Control by Understanding What Emotions Are
EDWIN A. LOCKE
145
9 Motivate Employee Performance through Goal Setting
GARY P. LATHAM
161
10 Cultivate Self-effi cacy for Personal and Organizational Effectiveness
ALBERT BANDURA
179
11 Using Empowerment to Motivate People to Engage in
Effective Self- and Shared Leadership
JAY A. CONGER AND CRAIG L. PEARCE
201
12 Pay for Performance
CATHY C. DURHAM AND KATHRYN M. BARTOL
217
13 Provide Recognition for Performance Improvement
FRED LUTHANS AND ALEXANDER D. STAJ KOVIC
239
14 Promote Procedural and Interactional Justice to Enhance
Individual and Organizational Outcomes
JERALD GREENBERG
255
PART V TEAM DYNAMICS 273
15 Foster Team Effectiveness by Fulfi lling Key Leadership Functions
J. RICHARD HACKMAN AND RUTH WAGEMAN
275
16 Compose Teams to Assure Successful Boundary Activity
DEBORAH ANCONA AND DAV ID CALDWELL
295
ftoc.indd vii 6/17/09 3:31:37 PM
CONTENTS vii
17 Making Group Process Work: Harnessing Collective Intuition,
Task Confl ict, and Pacing
GERARDO A. OKHUYSEN AND BETH A. BECHKY
309
18 Manage Intra-team Confl ict through Collaboration
LAURIE R. WEINGART AND KAREN A. JEHN
327
PART VI LEADERSHIP 347
19 Use Power Effectively to Infl uence People
GARY YUKL
349
20 Lead through Vision and Values
SHELLEY A. KIRKPATRICK
367
21 Foster Trust through Ability, Benevolence, and Integrity
JASON A. COLQUITT AND SABRINA C. SALAM
389
PART VII ORGANIZATIONAL PROCESSES 405
22 Design Structure to Fit Strategy
LEX DONALDSON
407
23 Communicate Successfully by Seeking Balance
DEBORAH A. CAI AND EDWARD L. FINK
425
24 Use Participation to Share Information and Distribute Knowledge
JOHN A. WAGNER III
445
25 Broaden the Decision Frame to Make Effective Decisions
RICHARD P. LARRICK
461
26 Stimulate Creativity by Fueling Passion
TERESA M. AMABILE AND COLIN M. FISHER
481
27 Manage Stress at Work through Preventive and Proactive Coping
TABEA REUTER AND RALF SCHWARZER
499
28 Manage Confl ict through Negotiation and Mediation
M. SUSAN TAYL O R AND ASHLEY FIELBIG
517
ftoc.indd viii 6/17/09 3:31:37 PM
viii CONTENTS
29 Sustain Organizational Performance through Continuous Learning,
Change and Realignment
MICHAEL BEER
537
P
ART VIII ENTREPRENEURSHIP 557
30 Gain Entrepreneurship Success through Swiftness and Experimentation
J. ROBERT BAUM
559
PART IX WORK, FAMILY, TECHNOLOGY, AND CULTURE 579
31 Achieve Work–Family Balance through Individual and Organizational
Strategies
BORIS B. BALTES AND MALISSA A. CLARK
581
32 Use Information Technology for Organizational Change
MARYAM ALAVI AND YOUNGJIN YOO
595
33 Make Management Practice Fit National Cultures and the Global Culture
MIRIAM EREZ
615
Index 633
fbetw.indd ix 6/17/09 3:32:11 PM
Contributors and Editor
Maryam Alavi
Goizueta Business School, Emory University
Maryam_Alavi@bus.emory.edu
Teresa M. Amabile
Harvard Business School
Deborah Ancona
MIT Sloan School of Management
Boris B. Baltes
Department of Psychology, Wayne State University
Albert Bandura
Department of Psychology, Stanford University
Bandura@psych.stanford.edu
Murray R. Barrick
Mays Business School, Texas A and M University
[email protected]u.edu
Kathryn M. Bartol
Robert H. Smith School of Business, University of Maryland
J. Robert Baum
Robert H. Smith School of Business, University of Maryland
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x CONTRIBUTORS AND EDITOR
Beth A. Bechky
Graduate School of Management, University of California
babechky@ucdavis.edu
Michael Beer
Harvard Business School
Email: [email protected]
Deborah A. Cai
Department of Communication, University of Maryland
David Caldwell
Management Department, Santa Clara University
Malissa A. Clark
Department of Psychology, Wayne State University
malissa@wayne.edu
Jason A. Colquitt
University of Florida
colquitt@ufl .edu
Jay A. Conger
Kravis Leadership Institute, Claremont McKenna College
Lex Donaldson
Australian School of Business, University of New South Wales
Cathy C. Durham
Director, Title V Grant, Glendale Community College
Marion B. Eberly
Michael G. Foster School of Business, University of Washington
Miriam Erez
Faculty of Industrial Engineering and Management, Israel Institute of Technology
merez@ie.technion.ac.il
Ashley Fielbig
College of Behavioral and Social Sciences
fbetw.indd xi 6/17/09 3:32:12 PM
xi CONTRIBUTORS AND EDITOR
Edward L. Fink
Department of Communication, University of Maryland
Colin M. Fisher
Morris Hall 103A, Harvard Business School
Jerald Greenberg
Institute for Civil Justice, RAND Corporation
J. Richard Hackman
Department of Psychology, Harvard University
[email protected]ard.edu
Brooks C. Holtom
McDonough School of Business, Georgetown University
bch6@msb.edu
Karen A. Jehn
Department of Social and Organizational Psychology, Leiden University, The Netherlands
Jehnka@FSW.Leidenuniv.nl
Timothy A. Judge
Department of Management, Warrington College of Business, University of Florida
timothy[email protected]fl.edu
Ryan Klinger
Warrington College of Business, University of Florida
[email protected]fl.edu
Shelley A. Kirkpatrick
Director of Assessment Services, Management Concepts, Vienna, Virginia
skirkpa[email protected]
Richard P. Larrick
Fuqua School of Business, Duke University
Gary P. Latham
Rotman School of Management, University of Toronto
latham@rotman.utoronto.ca
Thomas W. Lee
Michael G. Foster School of Business, University of Washington
fbetw.indd xii 6/17/09 3:32:12 PM
xii CONTRIBUTORS AND EDITOR
Edwin A. Locke
Robert H. Smith School of Business, Univeristy of Maryland (Emeritus)
Fred Luthans
Department of Management, University of Nebraska - Lincoln
Terence R. Mitchell
Michael G. Foster School of Business, University of Washington
Michael K. Mount
Tippie College of Business, University of Iowa
michael - [email protected]
Gerardo A. Okhuysen
David Eccles School of Business, University of Utah
gerardo@business.utah.edu
Craig L. Pearce
Peter F. Drucker and Masatoshi Ito School of Management
Craig.L.P[email protected]
Tabea Reuter
Freie Universit ä t Berlin, Germany
tabea.reuter@fu - berlin.de
Maria Rotundo
Joseph L. Rotman School of Management, University of Toronto
rotundo@rotman.utoronto.ca
Sabrina C. Salam
Editor ’s note: I regret to announce that Sabrina Salam died tragically in a car accident on
April 4, 2005
Eduardo Salas
Department of Psychology and Institute for Simulation and Training, University of Central Florida
Frank L. Schmidt
Tippie College of Business, University of Iowa
frank - [email protected]
Professor Dr. Ralf Schwarzer
Freie Universit ä t Berlin, Germany
[email protected] - berlin.de
fbetw.indd xiii 6/17/09 3:32:12 PM
xiii CONTRIBUTORS AND EDITOR
Kevin C. Stagl
Senior Talent Advisor and CEO, Talent Threshold LLC
Alexander D. Stajkovic
Department of Management and Human Resources, University of Wisconsin - Madison
astajkovic@bus.wisc.edu
Cynthia Kay Stevens
Robert H. Smith School of Business, University of Maryland
cstev[email protected]
M. Susan Taylor
Robert H. Smith School of Business, University of Maryland
Ruth Wageman
Department of Psychology, Harvard University
John A. Wagner III
Department of Management, Michigan State University
Laurie R. Weingart
Tepper School of Business, Carnegie Mellon University
Youngjin Yoo
Fox School of Business and Management, Temple University
Youngjin.yoo@temple.edu
Dr. Gary Yukl
Management Department, School of Business, University at Albany
G.yukl@albany.edu
fbetw.indd xiv 6/17/09 3:32:12 PM
fpref.indd xv 6/17/09 3:32:56 PM
Preface
The handbook, now in its second edition, fulfi lls a promise made when the fi rst behavioral
research in organizations began (Munsterberg, 1913 ) at the outset of the 20th century. It
identifies general principles, validated by science, for managing people, work, and organiz-
ations well. Mastering these principles is the essential focus of high - caliber management
education and effective workplace practice.
This book helps the reader to close the gap between the mass of scientific knowledge on
organizational behavior and the day - to - day decisions made in organizations. Managers typi-
cally make decisions using the knowledge they already possess. Few base their professional
decisions on systematic knowledge of organizations and human behavior. Even managers
with advanced training often possess little knowledge of scientific facts about the work they
do. Further, many management educators do not keep up with the ever- accumulating state
of knowledge in management research (Rousseau, 2006 ). By helping to close the research–
practice gap, this handbook offers both practitioners and educators the opportunity to bring
their own professional practices up to speed, building on the best available scientifi c evidence.
Scientific evidence is acquired through direct experience, controlled observation, measure-
ment, and experimentation. It is both an epitome of human knowledge and a project involving
many thousands of people. The science in this book stands in contrast to the business hype and
fads pushed by self - appointed gurus, who offer a good story and one - size - fits - all solutions, but
not scientific evidence. Acting on unsubstantiated beliefs and trendy claims ultimately wastes
an organization’s time and money and the efforts of many well - meaning people. Failed efforts
to improve the workplace take a toll on organizational well - being and performance and on the
relationship between an organization’s leaders and its members.
As Thomas Huxley said, “ The deepest sin against the human mind is to believe things
without evidence. ” Managing by evidence and fact means taking action based on core
principles and fundamental truths developed through science and systematic observation.
Decisions made on this sensible and reliable foundation, in turn, build employee trust that
managers are competent and well informed (Colquitt and Salam, Chapter 21 ). The hand-
book provides this foundation.
SCIENCE YOU CAN USE
The handbook is chock-full of science - based facts about the human - made world of
organizations. Massive amounts of data have been accumulated and integrated to develop
the knowledge base on which each chapter is based. Chapter authors are the field ’ s leading
fpref.indd xvi 6/17/09 3:32:57 PM
xvi PREFACE
experts, who have pulled together the most important facts regarding each topic in a fash-
ion both educators and practitioners can use. In doing so, the authors present much of
the best replicated and most useful knowledge in organizational behavior. For example,
did you know:
◆ In skilled jobs, top workers produce 15 times as much as the poorest performers.
The single best predictor of this difference in productivity is general mental ability
(intelligence, Schmidt, Chapter 1 ).
◆ Hiring people who are conscientious and emotionally stable has numerous benefi ts
for organizations (Barrick and Mount, Chapter 2 ).
◆ Job satisfaction is an important predictor of life satisfaction – and mental challenge
is a key factor in job satisfaction ( Judge and Klinger, Chapter 6 ).
◆ Turnover has several different causes. Each requires a different approach by manage-
ment (Eberly, Holtom, Lee, and Mitchell, Chapter 7 ).
◆ Setting specific challenging goals for employees is a very effective motivational tech-
nique but only if certain procedures are followed (Latham, Chapter 9 ).
◆ Money does motivate people, but pay systems have to be designed very carefully to
avoid dysfunctional consequences (Durham and Bartol, Chapter 12 ).
◆ Effective team leadership does not depend on leader charisma but rather on perform-
ing certain key leadership functions (Hackman and Wageman, Chapter 15 ; Ancona
and Caldwell, Chapter 16 ).
◆ Groups become skilled in interpersonal and task processes as they develop subcon-
scious knowledge (often called collective intuition) that helps them cope with new
situations (Okhuysen and Bechky, Chapter 17 ).
◆ Conflicts within teams can be effectively managed by implementing various coordi-
nation mechanisms (Weingart and Jehn, Chapter 18 ).
◆ To do their jobs well, managers need to utilize more types of power (e.g. expert
power) than simply the authority that comes with their position ( Yukl, Chapter 19 ).
◆ Top managers who set a clear vision for their organization and promote and enforce
a rational code of values typically outperform executives who don’t (Kirkpatrick,
Chapter 20 ).
◆ The optimal organizational structure depends upon a variety of factors including
size, strategy, and degree of specialization (Donaldson, Chapter 22 ).
◆ A key to effective decision making is broadening the decision framework. Doing so is
enabled by using checklists, logic models, and other heuristics (Larrick, Chapter 25 ).
◆ Negotiation is most effective if specific, research- based procedures are followed
(Taylor and Fielbig, Chapter 28 ).
◆ Swift action and experimentation are critical to entrepreneurial success, but one
does not have to be the fi rst mover to succeed (Baum, Chapter 30 ).
◆ Work/family balance requires both organizational supports and individual fl exibility
(Baltes and Clark, Chapter 31 ).
New scientific knowledge is discovered every day. Such knowledge is the product of
many thousands of actively thinking individuals. Just consider what was required just to
discover, validate, and apply germ theory in the field of medicine. Though its body of
knowledge is much younger than the core fields of the natural sciences, the same is true
fpref.indd xvii 6/17/09 3:32:57 PM
PREFACE xvii
in the field of organizational behavior. People are complicated, and the complexity
multiplies a million - fold when you put hundreds or thousands of them together in organ-
izations. People think, feel and make choices; genes, particles, atoms, and molecules do
not. Nevertheless, through systematic study it is possible to understand both people and
the organizations they create and belong to. The chapters in this book summarize much
of what’s been discovered about behavior in organizations. This provides both the educa-
tor and the practitioner a foundation to build on in their own work.
Have you ever heard these complaints?
◆
“ The collective wisdom from research is being lost. ”
◆
“ Practitioners do not read academic journals. ”
◆
“Academics, not practitioners, are driving the research agenda. ”
◆
“ The relevance, quality, and applicability of research are questionable. ”
◆
“ Practice is being driven more by fads and fashions than research. ”
◆
“ Many practices are doing more harm than good. ”
These statements might remind you of conversations with faculty in schools of business
or with practicing managers. From a management perspective, all of the statements basic-
ally ring true. Interestingly, however, the above statements were commonly voiced opin-
ions quoted in a nearly two - decade - old British Journal of Medicine editorial (Smith, 1991 )
complaining that the practices of physicians and hospitals were failing to apply evidence
from medical research in the ways they cared for patients. Today, evidence - based medi-
cine is becoming the established mode of practice, with participants from over 90 countries.
Management at the end of the 21st century ’s first decade is, on the other hand, in the
same position medicine was 20 or more years ago. A tremendous store of useful evidence
is available, but it awaits uptake by informed practitioners.
What changed in the field of medicine? A small percentage of physicians recognized
that much more was known about good medical practice than they actually used in day -
to - day patient care. These early adopters of evidence - based medicine led the way. They
changed the health - care environment by creating new practices and routines. Later adop-
ters accepted and employed these new routines once they became the “ way it ’ s done. ”
This pattern of early use of evidence - informed practice by a small percentage of pro-
fessionals has been observed repeatedly. It has been true throughout the many professions
that today base their core practices on evidence, ranging from medicine and nursing to
public health and criminology (Proctor, 2004 ; Rogers, 1995 ). Turning insights from
research- based evidence into standard operating procedures is now a norm in many fi elds.
From giving aspirin after a first heart attack in order to reduce the odds of a second, to
criminal justice programs that keep inmates actively involved in their families, these
routines all began with practitioners acting on an accumulation of scientifi c evidence.
This handbook positions you as an educator and/or practitioner to become an early
adopter of evidence - based organizational and management practices. As an early adop-
ter, you should experiment with ways of implementing this book ’s principles, take special
efforts to learn from your experiences, and provide such opportunities to others. Doing so
will further your understanding of how these principles work and how to use them well.
The very fact that you have opened this book suggests a search for more knowledge. You
are likely to believe that improving performance is both important and possible. Acting on
fpref.indd xviii 6/17/09 3:32:57 PM
xviii PREFACE
evidence requires active thinking and reflection, indicators of a certain hunger for under-
standing. It is that hunger and the commitment to learning that can make you an effective
user of evidence (cf. McAuliff and Kovera, 2008 ).
Not everyone is motivated to use evidence. Some people fail to learn new things
because they don’t want to bother exerting the effort. Others are overly optimistic about
the quality of their own expertise and performance (Ehrlinger et al., 2008 ). Ironically,
poor performers are the ones most likely to overestimate their expertise, because their
very lack of competence makes it difficult for them to recognize how incompetent they
are. This book was written for those in the remainder of the spectrum: those who are will-
ing and able to expand their knowledge and expertise. It is intended for those who are
prepared to work at deepening their understanding of what makes organizations effective,
particularly in terms of managing people.
The most useful products of evidence - based research in management are principles , that
is, general truths. For example, an important principle discovered in personnel selection is:
unstructured interviews are poor predictors of job performance. Interviewers using their own
idiosyncratic questions have low inter- interviewer agreement on applicants and virtually
no reliable capacity to identify the candidate who is best able to do a job. Recruiters
and personnel interviewers, and the people who manage them, are quite limited as well
as biased in the information they gather about the selection interview ’s effectiveness
(Highhouse, 2008 ). The other side of this principle in personnel selection is: structured inter-
views are good predictors of job performance (Stevens, Chapter 3 ). This second principle provides
a basis for improving the way personnel decisions are made.
At the same time, there are several reasons why evidence in itself is not a solution. First,
non - evidence - based practices are the norm – and most people are comfortable with the
status quo. In the case of personnel decisions, most interviewers believe they are good judg-
es of an applicant ’s qualifications. Interviewers do not realize how poor their choices really
are because they seldom get systematic feedback on their actual success rates. Second,
there are many institutional forces in place that keep invalid and ineffective practices
like unstructured interviews from being discarded. Colleges spend a lot of money creat-
ing dedicated space for on - campus recruiters to interview students. Thousands of books
give advice on the right way to answer interview questions. Abandoning the unstructured
interview in favor of structured interviews or any other validated selection tool can gener-
ate surprise, resentment, and potential backlash. Finally, it is often not obvious, at least at
first, exactly how to act on an evidence - based principle. Actually developing structured
interviews requires special effort to learn new techniques; design and format structured,
job - related questions; train interviewers in the new processes; and convince managers to
support the change. It often takes several attempts to introduce an effective new selection
system, requiring the political will to sustain the effort. (The results are worth it.)
In response to these challenges, encouraging the use of evidence - based principles
requires that you as an educator or practitioner are aware of, develop, and foster two
kinds of knowledge: declarative and procedural (Anderson, 1976 ). Principles are scientifi c
facts or declarative knowledge. Facts include systematic observations (e.g. unstructured inter-
views are unreliable; structured interviews are reliable; it is important to have inter- rater
agreement). Declarative knowledge is very fl exible. It refl ects general facts about the world
and is readily adaptable to new environments. For this reason, all chapters in the book
fpref.indd xix 6/17/09 3:32:57 PM
PREFACE xix
describe important declarative knowledge with broad applicability to both practitioners
and educators.
The second basic kind of knowledge is procedural knowledge, how to apply the facts science
has discovered. The book offers this type of knowledge too. Procedural knowledge is more
grounded in context. It is discovered by learning what works and what doesn’t in particular
environments and conditions of use. One exemplar of procedural knowledge can be found
in justice research. Over the past three decades, justice research has focused largely on
strategies for promoting fairness in the workplace. Following the early research on equity
theory in the 1960s, a newer generation of research addresses those features of organiz-
ational decision making and policies that influence justice beliefs. It offers action guides
regarding procedural justice that are adaptable to a variety of settings, including acting
consistently, suppressing bias, and providing opportunities for participation (Greenberg,
Chapter 14 ).
The chapters in this book present a mixture of declarative and procedural knowledge.
Cases in point include the characteristics and processes that make a performance appraisal
system work (Rotundo, Chapter 5 ), the value and ways of giving workers recognition for
good performance (Luthans and Stajkovic, Chapter 13 ), and the risks associated with
stress and ways of managing it (Reuter and Schwarzer, Chapter 27 ). The actual skills
required to apply this knowledge must still be developed through practice. Procedural
knowledge is itself further deepened through action. Acting on the knowledge this book
provides will involve you in the process of implementing, and sometimes inventing, prac-
tices that execute the essence of scientifi c principles.
We cannot assume others will take even the best evidence on faith. Helping people
understand what works and what doesn’t, and why, requires deepening your own under-
standing of the principles themselves. Having a good appreciation of why a principle works
is important for developing critical judgment about why and when the principle should
be applied and how to do so. This underlying knowledge is important to overcom-
ing objections and resistance, making it easier for you to effectively demonstrate how
a principle applies. The handbook provides a rich level of detail to help you carry on
critical conversations with those whose support you need. In many cases, people react
emotionally to acting on evidence - based principles, often because of their own subcon-
sciously held ideas (Locke, Chapter 8 ). In the course of your own practice or teaching
of evidence - informed management, you are in a position to help others change the
assumptions underlying their emotions. By cultivating your passion for evidence, you
can become more creative in how you use it (Amabile and Fisher, Chapter 26 ) and in
the ways you model for others what it means to be an effective practitioner or evidence -
infor med educator.
USING THIS HANDBOOK
A wonderful feature of this book is that you can begin with any chapter of interest and
pick and choose as you go. Every chapter contains references to other chapters, so you can
follow your interests to related chapters if you want to learn more. Indeed, you may fi nd
that, as you come to apply ideas in a chapter, re- reading it can lead you to fresh insights.
fpref.indd xx 6/17/09 3:32:57 PM
xx PREFACE
Each chapter is intended to be a reliable and useful companion to your progression
toward mastering key behavioral and organizational principles.
This handbook ’s usefulness to you depends on your efforts as a self - improving educator
or manager. For readers to be evidence - based practitioners or effective evidence - informed
educators, they need to design ways for themselves and others to act on the scien-
tific facts provided here. Evidence - based practice means obtaining and using the best
available evidence to inform decisions. It requires “ decision awareness, ” that is, being
aware of the many decisions and choices a practitioner might make each day, including
those where the choice might be to take no action at all. There is more refl ection and
judgment to being an evidence - based manager than is the case for a shoot - from - the-hip
counterpart.
This is not a cookbook. Evidence doesn’t make decisions or solve specifi c problems.
People do. This is done by critical reasoning, reflection on a principle ’s conditions of use,
and learning by doing. Acting on this book ’s principles requires a mindful approach. In
her eminently useful book on mindful learning, Langer ( 1997 ) illustrates the principles of
mindfulness. Students learning physics (or management, psychology, or medicine) are bet-
ter able to use principles to solve problems when they learn such principles conditionally.
There is a world of difference between learning “ X follows Y ” and “X often follows Y but only
under specific conditions.” A mindful approach where practitioners think conditionally creates
openness to new information. Let ’s take a case in point. Latham (Chapter 9 ) presents a host
of evidence - based principles that are predicated on a fundamental fact: challenging goals
motivate higher performance than do general goals. If we apply this principle mindfully,
we say “ higher performance (X) often follows from setting challenging goals (Y). ” Actively
framing this principle in a mindful way prompts a set of questions. What else is going on
in the situation which might make high performance occur (or not)? If high performance
didn’t occur, what might account for that? Did the individuals involved accept the goal? Did
they have the ability or knowledge to achieve the goal? As you can see, a mindful approach to
each principle fosters an implicit awareness of other possibilities and relevant facts in the
situation. Avoiding overconfidence in any single answer encourages more attention to all
of the possible answers. Entertaining greater possibilities ultimately means that more infor-
mation relevant to the problem is considered in trying to solve it.
Overthinking or analysis paralysis is a less common dysfunction than some might
think. Non - refl ective action – acting mindlessly out of habit or impulse – is far more
common. Once again, we can learn from the pursuit of evidence - based practice in medi-
cine. Physicians understand the pressure to make a diagnosis quickly. Doctors in training
learn to assess a patient ’s status in a deliberate fashion to avoid committing to a particular
judgment prematurely (Groopman, 2007 ). They learn routines for questioning their own
assumptions and re- reviewing information to avoid overlooking possible diagnoses. Using
evidence - based practice, the physician strikes a balance between the extremes of over-
thinking and impulsiveness. In becoming a more mindful practitioner, you will learn to
keep your mind open to possibilities as you develop deeper skill in diagnosing situations
and applying evidence in flexible ways. As an educator, by emphasizing mindful learning
you will help students use principles more effectively to solve problems and appreciate the
myriad ways in which they might apply to various situations.
Mindful learning increases with practice over time. The more you apply the hand-
book ’s principles, the more effective you will be at knowing how and when to use them
fpref.indd xxi 6/17/09 3:32:58 PM
PREFACE xxi
and how they connect to one another. Applying the same principle across different situ-
ations will create more flexible categories for interpreting your observations and deepen
the base of knowledge on which you can draw. Let ’s look at how one might mindfully use
one of the classic principles in change management: people characteristically resist change in
organizations (Beer, Chapter 29 ). The dynamics of resistance are closely tied to the degree
of attachment human beings usually have to the status quo. Appreciating this underlying
dynamic of change resistance can generate a host of considerations to guide the actions of
a would - be change manager. In particular, a mindful change manager, reading Beer ’s
chapter, can discover that he or she typically has an array of alternative interventions
that can be used to implement change. Changes undermining the status quo are, other
things being equal, more likely to generate resistance than changes keeping the status
quo basically intact. Similarly, an add - on to circumstances people already accept is a lot
less threatening than wholesale change. Thus, for instance, it typically is easier to add
profit sharing on top of a salary system than it is to completely replace salaries with profi t
sharing.
One important factor in designing a change strategy is to identify how necess-
ary it is to disrupt the status quo. Categorizing change interventions in terms of the
degree to which they challenge the status quo can give the change manager a variety
of choices. Profit sharing could be installed as an add - on to an existing system, period.
Alternatively, there can be a gradual phase - in of profit sharing and a revamping or
elimination of the salary system over time. Further, by reflecting on why people might
resist or accept change at various times, a practitioner who appreciates why a principle
works can identify more effective ways of acting on it in light of the circumstances he or
she faces. Some people might actually dislike the present status quo or prefer the benefits
a change offers. Those people are likely to be early supporters, rather than resistors of
change.
GETTING READY FOR THE JOURNEY
Developing your professional evidence - based practice is a life - long journey. Handbook
editor Ed Locke makes a compelling case that the principles presented herein give practi-
tioners new ways to think and to organize their world. It is important that you incorporate
the essential gist of this handbook ’s principles into your habits of mind. Doing so means
working with these principles on a day - to - day basis. This can be done one principle at a
time, as circumstances warrant. In time, you will develop powerful ways of acting effec-
tively and modeling to others what it means to be a competent, trustworthy manager.
Thoughtful use of this book moves you along the path to becoming an informed user
of evidence. Beware of any claim you encounter based on a single study (or none at all).
Know that evidence comes from a body of research, as assembled in this handbook. The
chapters herein refl ect findings accumulated from many and varied studies. The critical
reader should scrutinize each chapter for information that aids in applying its principles.
Two kinds of information are particularly helpful to watch for: supports and counter - indicating
factors. Supports are co - occurring conditions not part of the phenomenon itself that infl u-
ence its occurrence or consequences. Knowledge about effective workforce training – which
involves many critical subprinciples and often modern technology – has made huge strides
fpref.indd xxii 6/17/09 3:32:58 PM
xxii PREFACE
in recent years. Training builds self - efficacy (Bandura, Chapter 10 ). Training and effi cacy
foster successful empowerment (Conger and Pearce, Chapter 11 ; Salas and Stagl, Chapter
4 ). Information technology can support new ways of organizing and learning (Alavi and
Yoo, Chapter 32 ). Participation and quality communication foster indispensible knowledge
exchange (Cai and Fink, Chapter 23 ; Wagner, Chapter 24 ). Counter - indicating conditions
can also exist that make principles inapplicable or difficult to apply (e.g. for participation
to work there must be knowledge to exchange). In particular, Erez (Chapter 33 ) provides a
basis for reflecting on how cross - cultural forces can influence the application of principles.
She notes that directive leadership produces more positive responses in countries valuing
authority than in more egalitarian nations. Although each situation will have differing sup-
ports and counter- indicating factors present, the research on which this book ’s principles
are based demonstrates considerable generalizability across circumstances, when mind-
fully applied.
The environments we participate in can help or hinder learning. Shaping your environ-
ment in ways that promote learning begins with sharing your insights from this book and
engaging others in the process of learning to act on evidence - based principles. This book ’s
principles offer considerable guidance in learning - to - learn – particularly when you use
several principles in combination. Here are some basic combinations of principles that
can aid you in learning - to - learn. Seek feedback regarding the outcomes of your decisions,
and set goals for improving these outcomes (Latham, Chapter 8 ; Larrick, Chapter 25 ). Choose
your initial applications of this book ’s principles for the observability of their results, so
you get feedback you can learn from – and so you can demonstrate the benefits from act-
ing on evidence to others (Beer, Chapter 29 ). Using after- action reviews can help evaluate
what works and what needs improvement. Doing so regularly allows you to model effec-
tive use of evidence to the people you work with, and makes it easier to recognize them
for their contributions to that effort (Luthans and Stajkovic, Chapter 13 ). Colleagues and
employees who are later adopters of evidence will find it easier to apply evidence them-
selves if evidence - based routines, guidelines, and checklists are developed to help them
(see Larrick, Chapter 25 , for decision supports to improve decision processes; and Beer,
Chapter 29 , for ways of promoting organizational and behavioral change).
You – the reflective practitioner or the educator developing that competency in others
– can use the principles in this book in a host of ways. Experiment. Seek feedback on the
impact of your interventions or teaching. Redesign your management practice or teach-
ing based on this feedback. Update your knowledge as new scientific evidence continues
to emerge. In doing so, you are on your way to mastering evidence - based management.
Denise M. Rousseau
REFERENCES
Anderson , J. R. ( 1976 ). Language, Memory, and Thought. Hillsdale, NJ : Erlbaum .
Ehrlinger, J., Johnson , K., Banner , M. , Dunning , D., and Kruger, J. ( 2008 ). Why the
unskilled are unaware: Further explorations of (absent) self - insight among the incompetent .
Organizational Behavior and Human Decision Processes, 105 , 98–121 .
Groopman , J. ( 2008 ). How do Doctors Think? Boston : Mariner .
fpref.indd xxiii 6/17/09 3:32:58 PM
PREFACE xxiii
Highhouse, S. ( 2008 ). Facts are stubborn things . Industrial and Organizational Psychology, 1 ,
373–376 .
Langer, E. J. ( 1997 ). The Power of Mindful Learning. Cambridge, MA : Perseus .
McAuliff , B. D., and Kovera , M. B. ( 2008 ). Juror need for cognition and sensitiv-
ity to methodological flaws in expert evidence. Journal of Applied Social Psychology, 38 ,
385–408 .
Munsterberg , H. ( 1913 ). Psychology and Industrial Efficiency. Boston : Houghton - Mifflin .
Proctor , E. K. ( 2004 ). Leverage points for the implementation of evidence - based practice.
Brief Treatment and Crisis Intervention, 4 , 227–242 .
Rogers , E. M. ( 1995 ). Diffusion of Innovation. New York : Simon and Schuster .
Rousseau , D. M. ( 2006 ). Is there such a thing as evidence - based management? Academy of
Management Review, 31 , 256–269 .
Smith , R. ( 1991 ). Where is the wisdom? The poverty of medical evidence [editorial] .
British Medical Journal, 303 , 789–799 .
fpref.indd xxiv 6/17/09 3:32:58 PM
flast.indd xxv 6/17/09 3:33:43 PM
Editor ’ s Introduction
i
This handbook is about management principles, each chapter written by an expert in the
fi eld – but why do we need principles?
To quote Ayn Rand ( 1982 , p. 6):
. . . abstract ideas are conceptual integrations which subsume an incalculable number
of concretes – and without abstract ideas you would not be able to deal with concrete,
particular, real - life problems. You would be in the position of a newborn infant, to
whom every object is a unique, unprecedented phenomenon. The difference between
his mental state and yours lies in the number of conceptual integrations your mind has
performed.
You have no choice about the necessity to integrate your observations, your experiences,
your knowledge into abstract principles.
What, then, is a principle? A “ principle ” is a general truth on which other truths
depend. Every science and every field of thought involves the discovery and application of
principles . . . a principle may be described as a fundamental reach by induction (Peikoff,
1991 , p. 218).
Examples of principles that we use (or should use) in everyday life are:
“ Be honest ” (a moral principle);
“ Eat plenty of fruits and vegetables ” (nutrition);
“ Exercise regularly ” (health);
“ Save for the future ” (personal fi nance);
“ Do a conscientious job ” (work and career); and
“ Do not drive under the infl uence of alcohol ” (personal safety).
It would be literally impossible to survive for long if one did not think in terms of
principles, at least implicitly. In terms of concrete details, every situation is different from
every other. Suppose, for example, that a child were told, “ Do not run across that part of
this street today.” What is the child to do on other days? On other streets? On other parts
of the same street? Such a dictum would be useless to the child after the day had passed
or if he were in another location. Properly, the child would be taught a principle such as
i
This introduction is adapted from Locke ( 2002 ). I thank Jean Binswanger, Paul Tesluk,
Cathy Durham, and James Bailey for their helpful comments on the original article.
flast.indd xxvi 6/17/09 3:33:44 PM
xxvi EDITOR ’ S INTRODUCTION
“ Never cross any street without fi rst looking twice in each direction. ” This could guide the
child ’s actions for life and in every location in the world.
How are principles formulated? By integrating conceptual knowledge (for more on
concept formation see Locke, 2002 , and Peikoff, 1991 ). Principles, in turn, are integrated
into theories, again by induction (Locke, 2007 ).
TEACHING
The use of principles is critical to both the teaching and practice of management. Let ’s
begin with teaching. Most instructors would agree that management is a diffi cult sub-
ject to teach. First, it is very broad in scope. It entails scores if not hundreds of differ-
ent aspects. The more one studies the field, the more complex and bewildering it seems
to become. Second, there are no concrete rules or formulas to teach as in the case of
accounting, finance, or management science. Management is as much an art as a sci-
ence. Third, although there are theories pertaining to different aspects of management
(e.g. leadership), many find these theories to be less than satisfactory (to put it tactfully),
because they are too narrow, trivial, or esoteric and/or lack fi rm evidential support. Often
they are based on deduction rather than induction (Locke, 2007 ). The potentially useful
theories are mixed in with those that are not.
Traditionally, teaching has been done with either textbooks and/or the case method.
Both methods contain the same epistemological limitation. Textbooks, because they try to be
comprehensive, pile up detail after detail, but the details, even of subtopics, are very diffi cult
to integrate. As noted above, any theories that are presented often have severe limitations.
The result is that students routinely suffer from massive cognitive overload and a sense of
mental chaos; thus little of the material is retained (once the fi nal exam is over). This makes it
unlikely that what was memorized will be applied to the students ’ jobs and career.
With regard to case studies, these allow for the possibility of induction but shockingly,
it has been reported that some business schools openly prohibit connecting the cases to
each other. This is very unfortunate. Each case is a unique, concrete instance. Suppose,
for example, a business student concluded from analysis of a particular case study that a
certain high technology firm in New Hampshire should replace the CEO, develop a top
management team, and change to a matrix structure. What could the student take away
from such an analysis that would help him be a better manager? Nothing at all, if the
analysis were left in the above form. The case would only be useful if the student could
formulate some general principles from studying a variety of cases. The best way to do
this is by induction from a series of cases (see Locke, 2002 , for a detailed example), though
even this could be limited depending on the choice of cases. Faculty whom I knew who
used cases have admitted to me that they have to use theoretical materials (e.g. principles)
for the students to be able to even analyze the cases in the fi rst place.
The value of this book for teaching, therefore, is two - fold. First, it is an alternative to a
traditional textbook. The material in this book is essentialized. Only what the expert chapter
writers consider important is included; thus there is far less to remember than in a text. This
means the material can be more easily retained and more readily applied to the real world
of work. Further, the principles are evidence based and thus tied firmly to reality.
flast.indd xxvii 6/17/09 3:33:44 PM
xxvii EDITOR ’ S INTRODUCTION
Second, this book can be used as an adjunct to a course which uses cases. Here both
deduction and induction can be used. The book ’s principles can help students to analyze
the cases, yet new principles (or qualifications to principles) could be developed through
induction from the cases used.
( There are other problems with the case method that I can only note briefl y here, for
example the emphasis on verbal glibness; the fact that all the information needed is already
in the case; the fact that the case is taken out of a wider organizational context; the fact
that real action is not possible; and the lack of face - to - face contact with actual employees.
Primarily, these problems are inherent in the attempt to teach a practical skill in a classroom
and so have no perfect solution, though student mini - projects within real businesses help.)
MANAGEMENT
This book can also help managers and executives be more effective. However, reading
a book of evidence - based principles does not magically turn one into a good manager.
Principles cannot be mastered overnight and cannot be applied mechanically. Regardless
of the level of abstraction at which they are formulated, they are still abstractions, not
concrete rules such as “ turn off the lights when you leave the room. ” Principles, however,
are used to guide specifi c actions in specifi c contexts.
Consider the principle: “ Motivate performance through goal setting ” (Chapter 9 of
this book). This principle does not tell one what to set goals for (a very critical issue); who
is to set them; what the time span will be; what strategy to use to reach them; how per-
formance will be measured; how flexible the goals will be; or how performance will be
rewarded. To some extent formulating subprinciples can be a help, because these would
give some idea of how to implement the principles. For example, subprinciples for goals
(given in Chapter 9 ) would include (a) make the goals clear and challenging; (b) give
feedback showing progress in relation to the goals; (c) get commitment through build-
ing confidence; (d) insure that people have the needed knowledge; (e) provide needed
resources and so forth. But these subprinciples do not tell one everything. There will
always be judgment calls to be made, because one cannot teach every possible context
factor that a future manager might face.
Furthermore, principles cannot be applied in a vacuum, or one at a time in some arbi-
trary order. Many – maybe dozens or possibly hundreds – of principles must be used to
run a successful business. (The problem of cognitive overload is mitigated over time by
gradually automatizing the principles in the subconscious.) Furthermore, the principles
must be orchestrated so that they function in concert rather than working at cross - purposes.
It is not known how effectively one can teach such orchestration, although one can make
the student aware of the issue and give some examples. For example, the goal system must
be integrated with the performance appraisal system and the reward system.
It is worth observing here how principles are used in the real world of management.
I will use Jack Welch as an example in that he is considered among the greatest CEOs in
history, the creator of $ 300 – 400 billion in stockholder wealth at General Electric (e.g. see
Slater, 1999 ; Tichy and Sherman, 1993 ). Some principles that Welch used as his personal
guides to action are as follows:
flast.indd xxviii 6/17/09 3:33:44 PM
xxviii EDITOR ’ S INTRODUCTION
◆ Reality. Face reality as it really is, not as you want it to be. (I believe that the failure
to practice this principle is a major cause of business failures, for example Enron.
Such failures may involve flagrant dishonesty, but they also may involve simple
evasion – the refusal to look at pertinent facts – or putting emotions ahead of facts.)
◆ Control your own destiny or someone else will.
◆ Change before you have to.
◆ Compete to win.
Welch also helped develop a code of values or guiding principles for GE as a whole:
◆ Show integrity.
◆ Hate bureaucracy.
◆ Be open to new ideas regardless of their source.
◆ Pursue high quality, low cost, and speed.
◆ Have self - confi dence.
◆ Have a clear, reality - based vision.
◆ Possess energy and energize others.
◆ Use stretch goals and (differential) rewards.
◆ View change as an opportunity, not as a threat.
◆ Have a global focus.
Obviously, Welch was able not only to formulate but also to apply and orchestrate prin-
ciples in a way that no one else had. It helped that he had ambition and energy, a brilliant
business mind, an insatiable curiosity, the capacity to judge talent, and an uncanny ability
to fi gure out what businesses GE should and should not be in.
It is interesting that Jacques Nasser was a great admirer of Welch and tried to emulate
his principles at Ford but was unable to do so and ultimately lost his job. It is clear that
there is a long road between knowing good principles and being able to implement them
successfully in the context of a given organization.
Management principles need to be organized and integrated hierarchically so that the
leader will know what to do fi rst, second, and so forth. Except for facing reality as it is (not
evading), which should be the primary axiom of every manager, the hierarchy may not be
the same from business to business or in the same business at different times. Nor will they
all be OB principles. For example, in one context the most critical factor may be to decide,
as Welch did, what business or businesses a corporation should be in. This is an aspect of
vision and strategic management. There is no point in trying to manage the wrong busi-
ness or working hard to do the wrong thing. But in another context, the critical issue may
be cash flow, for example how to avoid bankruptcy in the next six months (a fi nance issue).
In a different context, the core problem might be getting the right people in the right jobs
or revamping the incentive system (HR issues).
What factors would determine the hierarchy? Three are critical: (1) Context. What are
the most important facts regarding the present situation of this company? Context means
seeing the whole and the relationship of the parts to the whole. (2) Urgency. What has to be
fixed right away if the company is to survive? (3) Fundamentality. What is the cause of most
of the different problems the organization is faced with or what must be fi xed before any
other fi xes will work (e.g. get good people in key jobs)?
flast.indd xxix 6/17/09 3:33:44 PM
xxix EDITOR ’ S INTRODUCTION
The hierarchy can change over time. For example, when Welch took over at GE, he
focused fi rst on changing the business mix (selling and buying businesses) and cutting costs
(increasing productivity) and layers of management. Later, he focused on better utiliz-
ing people (empowerment), and still later on improving quality (quality goals). Reversing
the sequence would not have worked, because empowerment and quality would not help
businesses that were not viable and would not “ take ” in a ponderous bureaucracy.
The foregoing is to make an important point for the second time: business is an art as
much as a science. Having correct principles will not work unless the leader knows how and
when to use them. Great leaders are rare because not many of them can effectively per-
form all the tasks that leadership requires (Locke, 2003 ).
The way to manage complexity is not to complexify it, as academics love to do. After
reading some six books about and one book by Jack Welch, I was struck by how frequently
he stressed the importance of simplicity. He said:
Simplicity is a quality sneered at today in cultures that like their business concepts the
way they like their wine, full of nuance, subtlety, complexity, hints of this and that . . .
cultures like that will produce sophisticated decisions loaded with nuance and complexity
that arrive at the station long after the train has gone . . . you can’t believe how hard it
is for people to be simple, how much they fear being simple. They worry that if they ’re
simple, people will think they are simpleminded. In reality, of course, it ’s just the reverse.
Clear, tough - minded people are the most simple. (Quoted in Lowe, 1998 , p. 155)
I am reminded of a recent conversation with a consultant who works as a coach to top
executives. He told me that one question he always asks in the first meeting is “ By the way,
how do you make money? ” The ones who answered by wallowing in complexity usually
did not make any. The ones who gave succinct, clear answers usually did.
For a business leader, achieving simplicity, as opposed to simplemindedness, is much
harder than achieving complexity. To achieve simplicity one must look through the morass
of complexity one is seemingly faced with, integrate the key observations, and come up
with the essential ideas that will make one ’s business succeed. That is, one must bring order
out of chaos. The way to do this is to think inductively and integrate one ’s observations
into principles.
NOTES REGARDING THE SECOND EDITION
The second edition of this book includes the following changes: (1) there are four new
chapters, a new introduction, a preface, and new authors for some of the original chap-
ters; (2) all the chapters have been updated with respect to the latest research and nearly
all present new cases examples; typically, however, the original principles have remained
the same (or been slightly reformulated); (3) all the chapters now have exercises at the end
to help students better understand the principles. Although authors were asked to title their
chapters in terms of a single principle, a few have two or three related principles.
This last relates to the issue of what the appropriate level of abstraction should be
for management principles. If they are formulated too broadly (e.g. “ be rational ” ), it can
be hard to connect them to specific actions without very extensive elaboration. On the
other hand, if they are too narrow ( “ turn out the light when leaving the room ” ), they are
flast.indd xxx 6/17/09 3:33:45 PM
xxx EDITOR ’ S INTRODUCTION
not broadly applicable and one would need thousands of them – too many to retain – to
cover the waterfront. Thus I encouraged mid - range principles and the authors thankfully
complied.
In closing, I should note that the principles in this book do not include all possible man-
agement principles (e.g. none of the chapters discussed strategic management principles –
that would be another book). I chose topics from I/O psychology, human resource
management, and organizational behavior (fields which all overlap) that I thought would
be of most interest and use to present and future managers. I hope these hopefully time-
less principles will contribute to your success at work.
REFERENCES
Locke, E. A. ( 2002 ). The epistemological side of teaching management: Teaching through
principles. Academy of Management Learning and Education, 1 , 195–205 .
Locke, E. A. ( 2003 ). Foundations for a theory of leadership . In S. Murphy and R. Riggio
(eds), The Future of Leadership Development. Mahwah, NJ: L. Erlbaum .
Locke, E. A. ( 2007 ). The case for inductive theory building. Journal of Management, 33 ,
867–890 .
L o w e , J . ( 1998 ). Jack Welch Speaks. New York : Wiley .
Peikoff , L. ( 1991 ). Objectivism: The Philosophy of Ayn Rand. New York : Dutton .
Rand , A. ( 1982 ). Philosophy: Who Needs It. New York : Bobbs - Merrill .
Slater , R. ( 1999 ). Jack Welch and the GE Way. New York : McGraw Hill .
Tichy , N. , and Sherman , S. ( 1993 ). Control Your Own Destiny or Someone Else Will. New York:
Currency Doubleday .
c01.indd 1 6/17/09 2:26:27 PM
Part I
SELECTION
c01.indd 2 6/17/09 2:26:28 PM
c01.indd 3 6/17/09 2:26:28 PM
1
Select on Intelligence
FRANK L. S CHMIDT
Other things equal, higher intelligence leads to better job performance on all jobs. Intelli-
gence is the major determinant of job performance, and therefore hiring people based on
intelligence leads to marked improvements in job performance – improvements that have
high economic value to the fi rm. This principle is the subject of this chapter.
This principle is very broad: it applies to all types of jobs at all job levels. Until a couple
of decades ago, most people believed that general principles of this sort were impossible
in personnel selection and other social science areas. It was believed that each organization,
work setting, and job was unique and that it was not possible to know which selection
methods would work on any job without conducting a validation study on that job in that
organization. This belief, called the theory of situational specificity, was based on the fact
that different validity studies of the same selection procedure(s) in different jobs in the same
organization and/or different organizations appeared to give different results. However, we
now know that these “ confl icting findings ” were mostly due to statistical and measurement
artifacts and that some selection procedures have high validity for predicting performance
on all jobs (e.g. intelligence) and others do a poor job of predicting performance on any job
(e.g. graphology) (Schmidt and Hunter, 1981 , 1998 ). This discovery was made possible by
new methods, called meta - analysis or validity generalization methods, that allow researchers
to statistically combine results across many studies.
Meta - analysis has also made possible the development of general principles in many other
areas beyond personnel selection (Hunter and Schmidt, 2004 ; Schmidt, 1992 ). For example,
it has been used to calibrate the relationships between job satisfaction and job performance
with precision (Judge, Thoresen, Bono, and Patton, 2001 ) and between organizational
commitment and work- related outcomes including job performance (Cooper- Hakim and
Viswesvaran, 2005 ).
WHAT IS INTELLIGENCE?
Intelligence is not the ability to adapt to one ’s environment; insects, mosses, and bacteria
are well adapted to their environments, but they are not intelligent. There are many ways
c01.indd 4 6/17/09 2:26:28 PM
4 FRANK L. SCHMIDT
in which organisms can adapt well to their environments; use of intelligence is only one
possible way. Intelligence is the ability to grasp and reason correctly with abstractions (con-
cepts) and solve problems. However, perhaps a more useful definition is that intelligence is
the ability to learn. Higher intelligence leads to more rapid learning, and the more com-
plex the material to be learned, the more this is true. Intelligence is often referred to as
general mental ability (GMA) and general cognitive ability, and we use all these terms inter-
changeably in this chapter.
Intelligence is the broadest of all human mental abilities. Narrower abilities include
verbal ability, quantitative ability, and spatial ability. These narrower abilities are often
referred to as special aptitudes. These special aptitudes do predict job performance
(although less well than GMA), but only because special aptitude tests measure general
intelligence as well as specific aptitudes (Brown, Le, and Schmidt, 2006 ; Schmidt, Ones,
and Hunter, 1992 ). It is the GMA component in these specific aptitude tests that predicts
job performance. For example, when a test of verbal ability predicts job or training per-
formance, it is the GMA part of that test – not the specifically verbal part – that does the
predicting (Brown et al., 2006 ).
Intelligence predicts many important life outcomes in addition to job performance: per-
formance in school, amount of education obtained, rate of promotion on the job, ulti-
mate job level attained, income, and many other things (Brody, 1992 ; Herrnstein and
Murray, 1994 ; Gottfredson, 1996 ; Jensen, 1998 ). It is even involved in everyday activities
such as shopping, driving, and paying bills (Gottfredson, 1996 ). No other trait – not even
conscientiousness – predicts so many important real world outcomes so well. In this sense,
intelligence is the most important trait or construct in all of psychology, and the most
“ successful ” trait in applied psychology.
The thousands of studies showing the link between intelligence (GMA) and job perform-
ance have been combined into many different meta - analyses. Ree and co - workers have shown
this for military jobs (Olea and Ree, 1994 ; Ree and Earles, 1991 , 1992 ; Ree, Earles, and
Teachout, 1994 ), as have McHenry, Hough, Toquam, Hanson, and Ashworth (1990) in the
famous Project A military study. ( With a budget of 24 million dollars, Project A is the larg-
est test validity study ever conducted.) Hunter and Hunter ( 1984 ) have shown this link for a
wide variety of civilian jobs, using the US Employment Service database of studies. Schmidt,
Hunter, and Pearlman ( 1980 ) have shown it for both civilian and military jobs. Other large
meta - analytic studies are described in Hunter and Schmidt ( 1996 ), Schmidt ( 2002 ), and
Schmidt and Hunter ( 2004 ). Salgado and his colleagues (Salgado, Anderson, Moscoso,
Bertua, and de Fruyt, 2003a , 2003b ) demonstrated the link between GMA and job perform-
ance across settings in the European countries. The amount of empirical evidence supporting
this principle is today so massive that it is hard to find anyone who questions the principle.
There has been an important development since the first edition of this book appeared
in 2000: a new and more accurate method for correcting for the biases created by range
restriction has been developed and applied (Hunter, Schmidt, and Le, 2006 ; Schmidt, Oh,
and Le, 2006 ; Schmidt, Shaffer, and Oh, 2008 ). (Range restriction is the condition in which
variability of the predictor (here intelligence) in one ’s sample of people ( job incumbents) is
artificially lower than in the population of people ( job applicants) one wants to get esti-
mates for.) Application of this procedure to existing data shows that previous estimates of
the validity of GMA – including those in the 2000 version of this chapter – were under-
estimated by 25% to 30%. In this chapter, I present the updated, more accurate validity
estimates. When performance is measured objectively using carefully constructed work
c01.indd 5 6/17/09 2:26:28 PM
5 SELECT ON INTELLIGENCE
sample tests (samples of actual job tasks), the correlation (validity) with intelligence measures
is about .84 – 84% as large as the maximum possible value of 1.00, which represents perfect
prediction. When performance is measured using ratings of job performance by super-
visors, the correlation with intelligence measures is .66 for medium complexity jobs (over
60% of all jobs). For more complex jobs, this value is larger (e.g. .74 for profes sional and
managerial jobs), and for simpler jobs this value is not as high (e.g. .56 for semi - skilled jobs).
Another performance measure that is important is amount learned in job training pro-
grams (Hunter et al., 2006 ). Regardless of job level, intelligence measures predict amount
learned in training with validity of about .74 (Schmidt, Shaffer, and Oh, 2008 ).
WHY DOES INTELLIGENCE PREDICT JOB PERFORMANCE?
It is one thing to have overwhelming empirical evidence showing a principle is true and
quite another to explain why the principle is true. Why does GMA predict job perform-
ance? The primary reason is that people who are more intelligent learn more job knowl-
edge and learn it faster. The major direct determinant of job performance is not GMA
but job knowledge. People who do not know how to do a job cannot perform that job well.
Research has shown that considerable job knowledge is required to perform even jobs
most college students would think of as “ simple jobs, ” such as truck driver or machine
operator. More complex jobs require even more job knowledge. The simplest model of
job performance is this: GMA causes job knowledge, which in turn causes job perform-
ance. But this model is a little too simple: there is also a causal path directly from GMA
to job performance, independent of job knowledge. That is, even when workers have
equal job knowledge, the more intelligent workers have higher job performance. This is
because there are problems that come up on the job that are not covered by previous job
knowledge, and GMA is used directly on the job to solve these problems. Many studies
have tested and supported this causal model (Hunter, 1986 ; Ree, Earles, and Teachout,
1994; Schmidt, Hunter, and Outerbridge, 1986 ). This research is reviewed by Schmidt
and Hunter ( 1992 ), Hunter and Schmidt ( 1996 ), and Schmidt and Hunter ( 2004 ). It has
also been shown that over their careers people gradually move into jobs that are consistent
with their level of GMA (Wilk, Desmariais, and Sackett, 1995 ; Wilk and Sackett, 1996 ).
That is, a process that sorts people on GMA takes place gradually over time in everyday
life. People whose GMA exceeds their job level tend to move up to more complex jobs;
and people whose GMA is below their job level tend to move down.
There is a broader theory that explains these research results: the traditional psycho-
logical theory of human learning (Hunter and Schmidt, 1996 ; Schmidt and Hunter, 2004 ).
This theory correctly predicted that the effect of GMA would be on the learning of job
knowledge. The false theory of situational specificity became widely accepted during the
first eight decades of the 20th century in considerable part because personnel psychol-
ogists mistakenly ignored the research on human learning.
Many lay people find it hard to believe that GMA is the dominant determinant of job
performance. Often they have known people who were very intelligent but who were dis-
mal failures on the job because of “ bad behaviors ” such as repeated absences from work,
carelessness at work, hostility toward the supervisor, unwillingness to work overtime to
meet a deadline, or stealing from the company. These are examples of so - called “ counter-
productive work behaviors ” (CWBs). Integrity tests predict CWBs with a validity of about
c01.indd 6 6/17/09 2:26:28 PM
6 FRANK L. SCHMIDT
.35 (Ones, Viswesvaran and Schmidt, 1993 ). People with lower scores on integrity tests
show more CWBs. The personality trait of conscientiousness also predicts CWBs (again,
negatively). However, a recent large - scale study ( N 800) found that GMA predicted
CWBs with a validity of .47; when the more accurate correction for range restriction is
applied, this fi gure becomes .57. So it is possible that the best predictor of CWBs is GMA.
People who are more intelligent show fewer CWBs.
There is also a facet of job performance called “ contextual performance ” (CP). CP
is just good citizenship behaviors, while CWB is bad citizenship behaviors as discussed
above. CP behaviors include willingness to help train new employees, willingness to work
late in an emergency or on a holiday, supporting the community relations and reputation
of the company, and many other such behaviors. CP behaviors and CWBs are differ-
ent from core job performance but are often confused with core job performance by lay
observers. CP and CWB behaviors are predicted by measures of the personality traits of
conscientiousness and to a lesser extent agreeableness (Dalal, 2005 ). We do not yet know
whether GMA predicts CP behaviors; these studies have yet to be done. Low ability leads
to an inability to perform well; low conscientiousness and low agreeableness lead, not pri-
marily to low performance on core job tasks but to lack of CP and/or more displays of
organizationally disruptive behaviors (CWBs). These disruptive behaviors are more visible
to lay observers (and to many supervisors) than differences between employees in core job
performance, probably because they appear so willful. On the other hand, a low ability
employee has difficulty learning how to perform the job, but if he/she has a “ good atti-
tude, ” this employee often seems like less of a problem than one showing CWBs. This
makes it difficult for some to clearly see the GMA – performance link in the real world
(Hunter and Schmidt, 1996 ).
Of course, low conscientiousness can lead to less effective performance if it results in
reduced effort (see Chapter 2 , this volume). For objective measures of job performance,
empirical evidence indicates that on typical jobs this effect is limited, probably because
most jobs are fairly structured, reducing the scope for individual differences in effort to
operate (Hunter, Schmidt, Rauschenberger and Jayne, 2000 ; Hunter and Schmidt,
1996 ). However, it is important to remember that when supervisors rate job perform-
ance, they incorporate into their ratings both CP behaviors and CWBs, in addition to
core job performance (Orr, Sackett, and Mercer, 1989 ; Rotundo and Sackett, 2002 ).
Hence supervisory ratings reflect a combination of core job performance and citizen-
ship behaviors, both good and bad. In the case of ratings, low conscientiousness and low
agreeableness lead to poorer citizenship behaviors, which lead to lower ratings of overall
performance. For the typical job, the weight on conscientiousness in predicting objectively
measured core job performance is only 20% as large as the weight on GMA. In predict-
ing supervisory ratings of job performance, it is 40% as large (Schmidt, Shaffer, and
Oh, 2008 ).
WHAT IS REQUIRED TO MAKE THIS PRINCIPLE WORK?
There are three conditions that are required to make this principle work. That is, there
are three conditions that are required for companies to improve job performance levels by
using GMA in hiring and to reap the resulting economic benefi ts.
c01.indd 7 6/17/09 2:26:29 PM
7SELECT ON INTELLIGENCE
Selectivity
First, the company must be able to be selective in who it hires. For example, if the labor
market is so tight that all who apply for jobs must be hired, then there can be no selection
and hence no gain. The gain in job performance per person hired is greatest with low
selection ratios. For example, if one company can afford to hire only the top scoring 10%,
while another must hire the top scoring 90% of all applicants, then with other things
equal the fi rst company will have a much larger gain in job performance.
There is another way to look at this: companies must provide conditions of employ-
ment that are good enough to attract more applicants than they have jobs to fill. It is
even better when they can go beyond that and attract not only a lot of applicants, but
the higher ability ones that are in that applicant pool. In addition, to realize maximum
value from GMA - based selection, employers must be able to retain the high performing
employees they hire.
Measuring general mental ability
Second, the company must have some way of measuring GMA. The usual and best
procedure is a standardized employment test of general intelligence, such as the
Wonderlic Personnel Test. Such tests are readily available at modest cost. Less valid are
proxy measures such as grade point average (GPA) or class rank. Such proxy measures
are partial measures of intelligence. Also, intelligence can be assessed to some extent
during the employment interview (Huffcutt, Roth, and McDaniel, 1996 ), although this
is a much less valid measure of GMA than a standardized written test.
Variability in job performance
Third, the variability in job performance must be greater than zero. That is, if all appli-
cants after being hired would have the same level of job performance anyway, then noth-
ing can be gained by hiring “ the best. ” This condition is always met. That is, on all jobs
studied there have been large differences between different workers in quality and quan-
tity of output. Hunter, Schmidt, and Judiesch ( 1990 ) meta - analyzed all available studies
and found large differences between employees. In unskilled and semi - skilled jobs, they
found workers in the top 1% of performance produced over three times as much output
as those in the bottom 1%. In skilled jobs, top workers produced 15 times as much as bot-
tom workers. In professional and managerial jobs, the differences were even larger. These
are very large differences, and they are the reason it pays off so handsomely to hire the
best workers.
There is another advantage to hiring the best workers: the pool of talent available for
future promotion is greatly increased. This is of great value to employers, because it helps
ensure high performance all the way up through the ranks of managers. When the right
people are promoted, their value to the firm in their new jobs is even greater than in their
original jobs. Thus selection of high ability people has implications not only for the job
they are hired onto, but for other jobs in the organization, too.
c01.indd 8 6/17/09 2:26:29 PM
8 FRANK L. SCHMIDT
ARE THERE EXCEPTIONS TO THIS PRINCIPLE?
As long as the three conditions described above are met, there are no known exceptions to
this principle. That is, there are no known cases or situations in which it is inadvisable
to select employees for general intelligence.
However, there are some people, particularly labor leaders, who believe there is an
exception. These people believe that companies should not select on mental ability if they
can select on job experience instead. That is, they believe that job experience is a bet-
ter predictor of job performance than general intelligence. What does research show?
For applicants with job experience of between none and five years, experience is a good
predictor of job performance. But in the range of higher levels of experience, say from
five to 30 years of job experience, job experience does not predict performance very well
(Schmidt, Hunter, Outerbridge, and Goff, 1988 ; Hunter and Schmidt, 1996 ). On most
jobs, once people have about five years of experience, further experience does not contrib-
ute much to higher performance. This is probably because experience beyond fi ve years
does not lead to further increases in job knowledge. This, in turn, may be due to the fact
that after five years of on - the - job learning, people in the typical job are forgetting job
knowledge about as fast as they are learning new job knowledge.
Another important fact is this: even for new hires in the one to five year range of job experi-
ence, where experience is a valid predictor of job performance, the validity declines over time.
That is, experience predicts performance quite well for the first three years or so on the job and
then starts to decline. By 12 years on the job, experience has low validity. But GMA continues
to predict job performance quite well even after people have been on the job 12 years or more.
What this means is that job experience is not a substitute for GMA. In the long run,
hiring on intelligence pays off much more than hiring on job experience (Hunter and
Schmidt, 1996 ). So if you had to choose, you should choose GMA. However, typically,
you do not have to choose; more than one procedure can be used. It may be desirable to
use both experience and GMA in hiring; as discussed later, it is usually best to use multiple
hiring methods. But in this case, the weighting given to GMA should be higher than the
weighting given to job experience.
ISSUES IN IMPLEMENTING AN ABILITY-BASED HIRING SYSTEM
Can intelligence be too high?
One issue is whether an applicant can have too much intelligence for a job. Recently,
an applicant was rejected for a job as a police officer in a New Jersey city on grounds that
his intelligence test score was too high! This city believed something that many people
believe: that intelligence leads to better job performance but only up to a point. After that, more
intelligence leads to lower job performance. Hundreds of studies have shown that this is
false. Higher intelligence leads to better job performance up to the highest levels of intel-
ligence (Coward and Sackett, 1990 ). There is a straight line (linear) relationship between intelli-
gence and job performance. Why do so many people believe otherwise? Probably because
they imagine a university professor or a medical doctor working as a janitor, and they think
“ This person would be so bored with this job that he would do a poor job. ” They forget
that the university professor or doctor would never apply for the janitor ’s job to begin with.
c01.indd 9 6/17/09 2:26:29 PM
9 SELECT ON INTELLIGENCE
Among people who actually apply to get real jobs, there is a straight line relationship between
intelligence and performance; the higher the intelligence, the better the job performance.
Hence, we do not have to worry about hiring people who are too intelligent for the job.
Does only intelligence matter in jobs?
A second issue is the one alluded to earlier: Although intelligence is the best predictor
of job performance, it does not follow that use of intelligence alone in hiring is the best
way to select people. In fact, it is well known that other predictors can be used along with
intelligence to produce better predictions of job performance than intelligence alone. For
example, for most jobs an intelligence test combined with an integrity test (a composite
personality of conscientiousness, emotional stability, and agreeableness) is 20% more valid
than an intelligence test alone. Adding a structured employment interview to an intelli-
gence test increases validity by 14% (Oh, Schmidt, and Shaffer, 2008 ). It is almost always
possible to add supplementary measures that increase validity. Some of these measures
are discussed in other chapters in this book (e.g. Barrick and Mount ’s chapter on selection
of conscientiousness and emotional stability).
Are there legal risks in selecting for intelligence?
A third issue is the potential for legal risks. Members of some minority groups, particularly
blacks and Hispanics, typically have lower average scores on GMA tests, leading to lower
hiring rates. Government agencies such as the Equal Employment Opportunity Commission
refer to these lower hiring rates as “ adverse impact. ” The term adverse impact is deceptive,
because it implies that the GMA tests create the difference in test scores, when in fact the
tests only measure real pre - existing differences in mental skills. This is shown by the fact
that minorities and non - minorities with the same test scores have the same level of later
job performance. That is, the test scores predict equally accurately for all groups; they are
predictively fair or unbiased (Schmidt, 1988 ; Wigdor and Garner, 1982 ).
Despite this fact, a lower hiring rate for minorities does sometimes lead to lawsuits.
Employers can win these suits by demonstrating that the tests are valid predictors of job
performance. Today, such demonstrations rely increasingly on summaries of the kinds
of research findings discussed in this chapter, rather than on studies conducted by the
employer. (This is part of the move away from the theory of situational specifi city, dis-
cussed earlier.) Since around the mid 1980s, employers have been winning more and more
such suits, and today they prevail in 80% or more of such suits. Research shows that the
value of the increases in job performance from good selection overshadows any potential
legal costs stemming from defending against such suits. But a key fact is that today there
are far fewer such suits to begin with. Currently, less than 1% of employment - related law-
suits are challenges to selection tests or other hiring procedures. This is almost certainly
due to the greatly reduced chances of winning such suits.
Political risks
However, this does not mean that all employers are willing to use intelligence tests in hir-
ing. Although the percentage of employers using GMA tests has been increasing, some
c01.indd 10 6/17/09 2:26:29 PM
10 FRANK L. SCHMIDT
firms view even the possibility of a lawsuit as a public relations disaster. They feel that
even if they win, they still lose on the public relations front. And they believe that public
relations problems can reduce sales and profi ts. These firms – mostly larger companies
that sell directly to consumers – are willing to tolerate lower levels of job performance
to avoid even the possibility of such a problem. Unfortunately for such firms, not using
GMA tests does not remove the possibility of lawsuits. Other selection procedures also
produce “ adverse impact. ” Employers have tried to reduce adverse impact by introducing
various forms of minority preferences in hiring, but courts have recently begun to strike
down many forms of minority preferences. For example, under the 1991 Civil Rights Act,
it is illegal to adjust test scores or other scores to equalize minority and non - minority hir-
ing rates. This issue is one that will probably remain unsettled for some time.
Many firms that rarely use written GMA tests build oral GMA tests into the interview
process. For example, in many employment interviews at Microsoft, job applicants are asked
to solve complex mental puzzles that require high GMA to answer correctly. In fact, even
ordinary job interviews have been found to be correlated with GMA scores (Huffcutt et al.,
1996 ). And, as would be expected from this fact, it has recently been found that even ordi-
nary job interviews show larger minority – majority differences (and thus “ adverse impact ” )
than was previously believed to be the case (Roth, Bobko, Switzer, and Dean, 2001 ).
The effect of testing for intelligence on employee attitudes
A fifth issue is whether the use of mental ability tests turns off applicants. Some have
argued that applicants do not like to take ability tests. However, surveys of applicant
attitudes reveal that they view mental ability and GMA tests as generally relevant to job
performance (more so than they do personality, bio - data, and integrity tests, for example),
and that they do not have a negative attitude toward such tests (Hausknecht, Day, and
Thomas, 2004 ). It also appears to be the case that when GMA or other ability tests are
used, applicants view the selection requirements as being higher and this increases the
status of the job and hence its attractiveness. That is, something that is harder to attain is
viewed as being more valuable.
The economic value of hiring on intelligence
A final issue is whether the economic value of the job performance gains from GMA -
based hiring is cancelled out by higher wages and salaries. The argument is that if a fi rm
hires more intelligent people, they will have to pay them more and this will cancel out the
gains from the increased job performance. However, in most cases it appears that there is
no increase in compensation costs, at least initially. This is especially likely to be the case
when few of the fi rm’s competitors use GMA measures in their hiring. Typically, there is a
pool of available applicants in the area for a particular type of job, and the higher GMA
applicants have no immediate effective way to command higher initial wages.
However, after some time on the job, when higher GMA employees have developed
high levels of performance, the employer can afford to share some of these gains with such
employees in the form of higher wages or salaries. In some cases, this might be necessary
to retain high performing employees. In any event, the payoff to the employer in terms of
enhanced job performance is much greater than any increase in compensation cost.
c01.indd 11 6/17/09 2:26:30 PM
11 SELECT ON INTELLIGENCE
Although most employers, for most jobs, do not pay different people in the same job at
different rates, they do typically promote the top workers to higher level jobs, and this does
result in higher pay. But at promotion the value of the worker ’s performance to the fi rm
increases much more than the worker ’s pay, creating another large net benefit to the fi rm of
good selection. On the other hand, employers that hire only mediocre or poor workers at
entry level find that their higher level jobs also become filled with mediocre or poor per-
formers. Again, as noted earlier, selection based on GMA improves performance not only
in the job in question, but also later in higher level jobs in the firm.
CASE EXAMPLES
We will first look at two negative examples and then examine two positive examples of
real world applications of GMA - based hiring.
US Steel plant at Fairless Hill, PA
Up until 1978, the US Steel plant at Fairless Hills, PA, selected applicants into their skilled
trades apprentice programs based on the applicants ’ total scores of a battery of ability
tests. These total scores were a good measure of GMA, and selection was from the top
down. The plant maintained apprentice programs in the wide variety of skilled trades
needed to run a steel mill: machinists, tool and die makers, electricians, sheet metal workers,
etc. The local unit of the United Steelworkers Union, however, did not like this selection
method. In negotiations with the union, the company agreed to modify the selection sys-
tem. In the new system, all applicants who scored above a low cut - off on each test, set at
about the 7th grade level, were considered equally qualified and eligible for hire. Only a
few applicants were screened out by this procedure. Applicants in the passing group were
selected based on plant seniority only. Hence, this plant went from a GMA - based hiring
system to one in which GMA played only a very minor role.
The apprentice training center at Fairless Hills was a well - run facility that kept excel-
lent records of apprentice performance from both before and after the change in the
selection system. These records showed that after the new selection system was intro-
duced, performance plummeted. Scores on the mastery tests of amount learned in train-
ing declined markedly. The flunk - out and drop - out rates increased dramatically. The
training time and training costs of those who did make it through the program increased
substantially – because many apprentices had to retake multiple units in the training. And
fi nally, the ratings of later performance on the job out in the plant declined.
This was a well - controlled natural quasi - experiment. The only change made was the
lowering of mental ability standards in selection. The training program and the tests
given in the program remained the same. The decline in performance was clearly due to
the lower intelligence of the new apprentices.
The Washington, DC police force
Up until the mid 1980s the Washington, DC police force was one of the best in the USA.
Applicants were selected for Police Academy training based on a general intelligence test
c01.indd 12 6/17/09 2:26:30 PM
12 FRANK L. SCHMIDT
constructed for the District of Columbia by the US Office of Personnel Management
(OPM), as required by then existing Congressional regulations. This test had been chal-
lenged legally and the case had gone all the way to the US Supreme Court, where it had
been upheld. A background investigation was also part of the selection process. The mayor
of Washington, Marion Barry, repeatedly voiced opposition to both the test and the back-
ground check on grounds that the failure rate on both was higher for blacks. In 1987, when
Congress relinquished control over the selection process to the Mayor ’s offi ce, Barry took
responsibility for the selection process out of OPM ’s hands. He then eliminated both the
GMA test and the background test. The replacement selection process was somewhat
unclear, but reputedly involved fairly perfunctory interviews.
The first consequence was that the flunk - out rate in the Police Academy soared, with
over 80% of the new hires being incapable of completing the required training. Failure
rates that high were viewed as unacceptable, and so the content of academy training was
“ dumbed down. ” When this reduced the failure rate only slightly, the content was further
dumbed down, and then dumbed down again. This process of successive adjustments ulti-
mately “ solved ” the flunk - out problem.
However, the police officers being produced were incompetent. Large numbers of mur-
der indictments had to be dismissed because the reports written by the officers on the scene
were unintelligible, due to the low literacy levels. The solution rate for murder cases, for-
merly one of the highest in the USA, declined precipitously to one of the lowest. Firearms
accidents soared because officers did not know how to use their sidearms properly.
Complaints of police abuse and incompetence from citizens soared. In addition, crime on
the police force became quite common. For example, a group of police offi cers was found
to be selling handguns previously confiscated from criminals back to criminals! These changes
and others are described by Carlson ( 1993a , 1993b ).
In this example, unlike the US Steel example, two things are happening. First, people
low in intelligence are being hired, resulting in plummeting job performance. Second,
criminals are being hired because there was no background investigation to ensure that
they were not, and the result was crime on the police force.
Employment in the federal government
We now turn to a more positive example – or at least a less negative one. For many jobs in
the federal government, people can either be hired from the outside using a GMA test or
they can be promoted from within. When they are promoted from within, GMA tests are
usually not used – although they sometimes are. Instead, people are evaluated based on
records of their education and training and on appraisals by their supervisors of their
performance in their present jobs. These procedures do have some validity but would not
be expected to be as valid as GMA - based hiring.
So we can ask the following question. After people have been on the job some time,
is the job performance higher for those initially selected using a GMA test? Government
researchers at OPM addressed this question in a detailed study of three representative mid -
level government jobs: IRS auditor, social security claims examiner, and customs inspector.
In each of these jobs, people hired both ways had been on the job from five to eight years.
c01.indd 13 6/17/09 2:26:30 PM
13 SELECT ON INTELLIGENCE
The measure of job performance was unusually good: it was the sum of a hands - on work
sample test, a job knowledge test, and supervisory ratings of job performance.
In all three jobs, those selected years earlier using GMA tests had higher job perform-
ance. The average job performance of the non - GMA - selected employees was at the 50th
percentile, while that of the GMA - selected employees was at the 70th percentile. This is a
large difference. If this difference is projected over the federal workforce as a whole, it
amounts to billions of dollars per year in increased output (Schmidt, Hunter, Outerbridge,
and Trattner, 1986 ). We can also look at this another way. Americans expect their federal
government to perform a wide variety of socially important tasks (e.g. administer the
social security program, protect homeland security, run the federal tax system fairly and
accurately, catch people who commit federal crimes, etc.). To the extent that the federal
government hires less competent people, these jobs are done less well. As shown in this
research, failure to select on GMA results in the hiring of less competent people and
produces lower job performance.
This study was a reasonably controlled quasi - experiment. During the study, the rese archers
did not know which employees had initially been selected using a GMA measure and which
had not. The only relevant difference between the two groups of workers was the method by
which they had been hired. This study provides strong evidence that GMA - based hiring pays
off in higher job performance.
The Philip Morris plant in Cabarrus County, North Carolina
The US Employment Service began a new nationwide program of employment testing,
operated through state employment offices, in the early 1980s. Like its earlier program,
it was based on the General Aptitude Test Battery (GATB). One of the three abilities
measured in that program was GMA (the other two were general perceptual ability and
general psychomotor ability). This new program was based on the methods of meta - analysis
or validity generalization that were mentioned at the beginning of this chapter.
The large Philip Morris plant in Cabarrus County, North Carolina, was one of the fi rst
employers to subscribe to this testing program. They signed an agreement under which
the state employment service tested and referred the higher scoring applicants to Philip
Morris for possible hire. For the jobs at Philip Morris, most of the weight was placed on
GMA in determining who was hired.
The human resources department at Philip Morris decided to conduct a study to com-
pare the performance of GATB – GMA - selected workers and workers hired without use
of the test. They found that the GMA - selected workers were superior across a variety of
performance measures. For example, there was a 35% gain in output. The GMA - selected
workers learned 8% more skills during job training, had 25% fewer operator failures and
58% fewer disciplinary actions. The incidence of unsafe job behaviors was 35% less and the
reduction in work days lost to accidents was 82%.
These are large differences. The Philip Morris personnel researchers, Dennis Warmke
and William Van Arnam, noted the employment interview used might have contributed
somewhat to the performance superiority of these workers. However, they stated that
because it was the GMA test that screened out most of the applicants who were not hired,
c01.indd 14 6/17/09 2:26:30 PM
14 FRANK L. SCHMIDT
the GMA test was the dominant influence producing the performance improvements.
This research is described in McKinney ( 1984 ).
CONCLUSION
Higher intelligence leads to better job performance on all jobs, and the increases
in job performance resulting from hiring on GMA have high economic value for
organizations. Higher intelligence causes higher job performance primarily because
it causes people to learn job knowledge faster and to learn more of it. However, intel-
ligence is also used directly on the job to solve performance - related problems, inde-
pendent of prior job knowledge. The primary requirement that an organization must
meet to make GMA - based hiring work well is the ability to attract job applicants and
to retain them once they are hired. Despite beliefs to the contrary, hiring on job experi-
ence is inferior to hiring on GMA. Although GMA is the most important determinant
of job performance, it is not the only determinant. Therefore, firms should use other
valid procedures along with GMA. Finally, we have seen four concrete, graphic, real
world examples of the impact of GMA on job performance.
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16 FRANK L. SCHMIDT
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c01.indd 17 6/17/09 2:26:31 PM
17 SELECT ON INTELLIGENCE
EXERCISES
Hiring office workers
You are the human resources director at a large firm and you are faced with designing a
system for hiring office workers. An office manager comes to you and says the fi rm should
not use written GMA tests because of the danger of law suits. He says he knows GMA is
important to job performance but maintains that you can use “ GMA - loaded ” interviews
to measure GMA and thus get the benefit of using GMA without leaving a “ paper trail ”
of test scores that could stimulate a law suit. Respond to this manager based on what
you learned from this chapter. What would you tell him? What is the foundation for your
response?
Educating the CEO
You are the human resources director in your organization. The CEO calls you to her
office for a meeting and tells that she knows from 35 years of experience in dealing with
people that the key determinant of high job performance is personal values and sense
of responsibility. She says she would like to have all hiring in the company done using
measures of values and sense of responsibility. Based on what you learned in this chap-
ter, what would you tell her? What is the basis for the position you are taking?
c01.indd 18 6/17/09 2:26:31 PM
c02.indd 19 6/17/09 2:31:37 PM
2
Select on Conscientiousness and
Emotional Stability
MURRAY R. BARRICK AND MICHAEL K. MOUNT
Chapter 1 of this volume showed that selecting people with higher intelligence leads to
better job performance. However, job performance is not only a function of an individual ’s
ability (i.e. what he or she can do); it is also a function of their motivation (i.e. what they
will do). The two personality traits that best predict individuals ’ long - term, dispositional
motivation levels and subsequent work behaviors are conscientiousness and emotional
stability. The universal principle that we advocate in this chapter is that organizations
should always select on the personality dimensions of conscientiousness and emotional sta-
bility. A subprinciple of the chapter is that organizations should also select on other person-
ality dimensions, but such practices should be dictated by the specifi c requirements of the
job or the particular criterion.
What behaviors do employers perceive that employees need in order to succeed in the
21st century? A collaborative study of over 400 employers across the USA conducted by
The Conference Board, Partnership for 21st Century Skills, Corporate Voices for Working
Families, and the Society for Human Resource Management (2006) examined the readi-
ness of new entrants to the workforce. Although both basic and applied skills are important,
survey responses revealed, when results were combined across education levels, that the two
most important applied skills were professionalism/work ethic and teamwork/collaboration.
These skills are influenced by “ will do ” factors and were viewed as more important than
those skills associated with the “ Three Rs. ” Similar findings were reported in a large study
conducted in a Midwestern state that asked employers which employee behaviors were
most important for workplace success (Michigan Employability Study, 1990). The seven top
ranked items were: be free from substance abuse; demonstrate honesty and integrity; pay
attention to the person speaking; follow directions given verbally; show respect for others;
show pride; and be punctual in attendance. Employers clearly value “ will do ” characteristics
in applicants. Many of these essential workplace behaviors that employers desire are largely
influenced by an individual ’s motivation and are influenced less by general mental ability.
c02.indd 20 6/17/09 2:31:38 PM
20 MURRAY R. BARRICK AND MICHAEL K. MOUNT
In this chapter we discuss the benefits that accrue to organizations when they select employ-
ees on the personality traits of conscientiousness and emotional stability.
WHAT BEHAVIORS DO CONSCIENTIOUSNESS AND
E
MOTIONAL STABILITY PREDICT?
Personality can be defined as an individual ’s relatively stable and enduring pattern of
thoughts, feelings and actions. Although more than 15,000 trait terms in the English
language can be used to describe personality, most researchers agree that the structure of
personality consists of five broad dimensions, often called the Big Five or the Five Factor
Model (FFM) of personality: conscientiousness (i.e. dependable, industrious, effi cient and
achievement oriented), emotional stability (i.e. calm, steady, self - confident, and secure),
extraversion (i.e. gregarious, sociable, ambitious, and active), agreeableness (i.e. courteous,
helpful, trusting, cooperative, and considerate), and openness to experience (i.e. cultured, intel-
lectual, imaginative, and analytical).
Performance
Of the five major personality dimensions, conscientiousness and emotional stability are the
most valid predictors of performance outcomes (such as those listed above) across different
occupations. Other things being equal, individuals high on conscientiousness and emotional
stability perform better on the job and this improved job performance has a substantial
economic impact on the firm. Conscientious individuals are achievement oriented, hard
working, dependable, persistent, responsible, organized, careful, and reliable. Such traits are
fundamentally related to motivation at work because they lead to increased effort and fol-
lowing rules. Similarly, neurotic individuals (emotional stability is often referred to by the low
end traits) are nervous, highly strung, stress prone, moody, lack self - esteem, and are insecure.
Not surprisingly, such traits tend to inhibit positive motivational tendencies at work. That is,
individuals who spend time worrying about their performance, doubt their abilities, require
assurance from others, are depressed and stress prone are unable to develop adequate coping
strategies and cannot focus attention on the tasks at hand. In short, traits associated with the
low end of emotional stability (neuroticism) lead to poor performance.
The general principles that we advocate in this chapter have a strong foundation in
research. They are derived from the results of several large - scale, meta - analytic studies that
have demonstrated the relationship between personality traits and job performance (e.g.
Barrick and Mount, 1991 ; Barrick, Mount, and Judge, 2001 ; Hough, 1992 ; Hurtz and
Donovan, 2000 ; Salgado, 1997 , 1998 ). For example, Barrick et al. ( 2001 ) reviewed eight
meta - analyses conducted since 1990 involving hundreds of studies and thousands of employ-
ees and reported that both conscientiousness and emotional stability predicted overall job
performance across a wide variety of jobs. Furthermore, because conscientiousness and emo-
tional stability are only moderately correlated with each other and have small correlations
with intelligence, each can add unique information to the prediction of job performance.
Thus, hiring applicants with higher conscientiousness, emotional stability and intelligence will
result in an increase in the number of employees who perform assigned job tasks effectively,
which in turn will have substantial economic benefits to organizations.
c02.indd 21 6/17/09 2:31:39 PM
21 SELECT ON CONSCIENTIOUSNESS AND EMOTIONAL STABILITY
A major reason to select employees on conscientiousness and emotional stability is the
remarkable breadth of work behaviors they predict. Importantly, many of these work behav-
iors relate to overall organizational effectiveness yet are not typically included in measures of
overall job performance; moreover, they are not predicted as well by intelligence. In order
to understand the behaviors that conscientiousness and emotional stability predict, it is use-
ful to distinguish among the three major components of job performance: task behaviors,
citizenship behaviors and counterproductive behaviors (Rotundo and Sackett, 2002 ). Task
performance refers to the core behaviors of a job and includes those that (directly or indi-
rectly) contribute to the production of a good or the provision of a service. These behaviors
are usually captured by overall performance ratings or by objective measures of performance
such as total sales during the quarter or number of new accounts opened. Organizational
citizenship performance, also called contextual performance (Borman, Penner, Allen, and
Motowidlo, 2001 ), refers to behavior that contributes to the goals of the organization by
contri buting to its social and psychological environment (such as providing assistance to
co - workers who need help). Counterproductive work performance consists of a broad array
of voluntary behaviors that harm the well - being of the organization or its employees and
includes behaviors such as violence on the job, racial slurs, theft, unsafe behavior, and misuse
of information, time, or resources (Berry, Ones, and Sackett, 2007 ).
The studies discussed above clearly demonstrate that conscientiousness and emotional
stability predict overall job performance and the results are quite robust and generalize to
nearly all jobs. In fact, Hurtz and Donovan ( 2000 ) reported that of the Big Five personal-
ity traits, conscientiousness and emotional stability have the highest relationship with task
performance. Thus, whether predicting overall job performance or a narrower defi nition
of task performance, conscientiousness and emotional stability emerge as the two critical
personality traits that determine the employees ’ technical proficiency and performance
completing specifi c job duties.
Citizenship and (non - ) counterproductive work behaviors
In addition to predicting the task performance component of jobs, conscientiousness and
emotional stability also predict citizenship and counterproductive work behaviors. This
represents a difference between intelligence on the one hand and conscientiousness and
emotional stability on the other, as there is little evidence that intelligence predicts citizen-
ship and counterproductive work behaviors. Citizenship behaviors include the willingness
to pitch in and help during emergency or overload situations, to take on tasks no one else is
willing to do, and to go beyond prescribed role requirements to get the job done. Borman
et al. ( 2001 ) showed that conscientiousness (especially dependability) and to a lesser extent
emotional stability predict citizenship behaviors and these correlations are higher than
those typically reported for task behaviors. In another meta - analysis, Hurtz and Donovan
( 2000 ) found these same two traits relate to citizenship behavior through dedication to the
job and interpersonal facilitation. Job dedication includes measures of persistence, reli-
ability, and commitment to goals, while interpersonal facilitation refers to interpersonal
relationships at work (e.g. in work teams), cooperation, being courteous and a team player.
Thus conscientiousness and emotional stability influence citizenship behaviors at work
through their relationship to job dedication and interpersonal facilitation.
c02.indd 22 6/17/09 2:31:39 PM
22 MURRAY R. BARRICK AND MICHAEL K. MOUNT
There is considerable evidence that conscientiousness and emotional stability are also
related to organizational citizenship behaviors through the broad set of helping behav-
iors associated with teamwork and customer service. For example, Mount, Barrick, and
Stewart ( 1998 ) found conscientiousness and emotional stability were consistently related to
being a team player across 11 different studies. Selecting on conscientiousness and emo-
tional stability is also important to optimize team performance. Based on responses of
employees in 51 work teams, Barrick, Stewart, Neubert, and Mount ( 1998 ) found that
teams higher in conscientiousness and emotional stability (as well as general mental abil-
ity and extraversion) received higher supervisor ratings of team performance. Two recent
meta - analyses (Bell, 2007 ; Peeters, Van Tujil, Rutte, and Reymen, 2006 ) of the relationship
between Big Five traits and team performance found that higher team scores on conscien-
tiousness and agreeableness were associated with high team performance. If the analyses
were restricted to actual work settings, Peeters et al. ( 2006 ) also showed teams with higher
mean levels of emotional stability obtained higher team performance. Furthermore, Frei
and McDaniel ( 1998 ) reported that customer service measures are strong predictors of
supervisory ratings of performance, and other research has shown that the two strongest
personality correlates of customer service orientation are emotional stability and conscien-
tiousness (Ones and Viswesvaran, 1996 ). These findings are noteworthy as they correspond to
the survey results described earlier in the chapter that showed one of the two most important
workplace skills that employers desire is teamwork/collaboration.
Another important reason to select on conscientiousness and emotional stability is they
are centrally (and negatively) related to intentional harmful behaviors at work, i.e. counter-
productive work behaviors. Evidence was presented at the beginning of the chapter that
employers are very interested in hiring employees who are honest, demonstrate integrity, and
follow workplace rules. Research demonstrates that personality - based integrity tests are valid
predictors of such counterproductive behaviors (Ones, Viswesvaran, and Schmidt, 1993 )
as “ badmouthing ” the organization, being belligerent with customers or fellow co - workers,
sabotaging equipment or products, stealing goods or money, and even engaging in excessive
alcohol or drug abuse, as well as being able also to predict supervisory ratings of overall job
performance. As noted above, integrity tests are related primarily to conscientiousness and
emotional stability (along with agreeableness). Results of a study by Berry et al. (2007) clari-
fied how emotional stability and conscientiousness predict counterproductive behavior: emo-
tional stability predicts both interpersonal deviance and organizational deviance, whereas
conscientiousness predicts organizational deviance. Consequently, the more conscientious and
emotionally stable a firm’s employees are, the less likely they are to engage in counterproduc-
tive behaviors at work.
Low turnover and absenteeism
In addition to positive “ citizenship ” behaviors, individuals high on conscientiousness and
emotional stability are more likely to stay with the organization. Turnover is a major cost
to employers; consequently, many employers strive to hire employees who not only per-
form well but also stay on the job for a long period of time, particularly in tight labor
markets. Conscientiousness and emotional stability have been found to consistently (nega-
tively) predict an individual ’s propensity to withdraw at work. For example, Barrick and
Mount ( 1996 ) showed that voluntary turnover was predicted by both personality traits.
c02.indd 23 6/17/09 2:31:39 PM
23 SELECT ON CONSCIENTIOUSNESS AND EMOTIONAL STABILITY
A recent meta - analysis conducted by Zimmerman ( 2008 ) showed that personality traits
impact individuals ’ intentions to withdraw from work, as emotional stability best predicted
(negatively) employees ’ intentions to quit, whereas conscientiousness (and agree ableness)
best predicted (negatively) actual turnover decisions. Similarly, a meta - analysis by Ones,
Viswesvaran, and Schmidt ( 2003 ) showed that personality - based integrity tests predicted
voluntary absenteeism and the validity generalized across various predictor scales, organ-
izations, and jobs. Ones ( 1993 ) examined more than 100 studies reporting correlations
between integrity tests and personality measures and found that integrity tests were related
primarily to conscientiousness and emotional stability (along with agreeableness). Thus
selecting on conscientiousness and emotional stability will reduce workforce instability due
to excessive absenteeism, tardiness, even turnover.
Leadership and entrepreneurship
In addition to predicting task, citizenship, and counterproductive behaviors, emotional sta-
bility and conscientiousness also predict many other important work outcomes that cannot
be neatly categorized into one of these three performance categories. For example, Judge,
Bono, Ilies, and Gerhardt ( 2002 ) conducted a meta - analysis of the relationship between the
personality traits and leadership (using a criterion that consisted of both leader emergence
and leader effectiveness). Their results showed that both conscientiousness and emotional
stabi lity were generalizable predictors of leadership (as were extraversion and openness
to experience). Further, both conscientiousness and emotional stability have been shown to
predict entrepreneurial status (Zhao and Seibert, 2005). Although entrepreneurial activity
involves leadership, it is “ unique ” as the context differs by involving a start - up or rapidly
growing fi rm.
Expatriate success
These two traits are also related to other aspects of work performance that affect organ-
izational productivity and profits. For example, organizations spend hundreds of thousands of
dollars preparing and transferring employees overseas for work assignments. Research shows
that individuals who are higher on both conscientiousness and emotional stability perform
better as expatriates (Mol, Orn, Willemsen, and Van Der Moler, 2005 ). Moreover, organiza-
tions spend billions of dollars each year on training - related activities. One trend is to select
employees to participate in training programs who are likely to benefit most from the train-
ing. Research has shown that individuals who are higher on conscientiousness are not only
more motivated to learn (Major, Turner, and Fletcher, 2006 ), but also perform better in the
training program, although other traits like openness to experience, extraversion, and proac-
tive personality also predict training performance (e.g. Barrick et al., 2001 ; Salgado, 1997 ).
Earnings
Higher conscientiousness and emotional stability is also rewarded in the labor market. Using
a large Dutch sample, Nyhus and Pons ( 2005 ) showed that emotional stability was positively
associated with wages among both men and women and conscientiousness is most highly
rewarded at the beginning of the employment relationship. Mueller and Plug ( 2006 ) found
c02.indd 24 6/17/09 2:31:39 PM
24 MURRAY R. BARRICK AND MICHAEL K. MOUNT
that among a large group of high school graduates in 1957 all of the Big Five traits signifi -
cantly predicted earnings and collectively their effects are comparable to those reported for
GMA. Further, Roberts, Caspi, and Moffitt ( 2003 ) found that people who were more consci-
entious in terms of being more controlled and industrious at the age of 18 tended to be on
higher status work paths at 26 years of age, to feel more involved in their work, and to feel
more fi nancially secure.
Safety
A meta - analysis by Clarke and Robertson ( 2005 ) showed that low conscientiousness and low
agreeableness were valid and generalizable predictors of accident involvement. Two other
traits, openness to experience and emotional stability, were also found to be (negatively)
correlated to accidents, though there was more variance in these estimates across studies.
Given the high costs associated with accidents and the potential harm to human lives, this
shows another way selecting employees on conscientiousness and emotional stability can
benefit organizations. Taken together, all of these results convincingly reveal that employees
with higher levels of these two traits are likely to be successful in a myriad of ways at work,
including by being a higher performer, a better citizen, a more effective team player or leader,
with greater integrity and a propensity to be committed to and stay with the fi rm.
Compliance
Another benefit to organizations when employees are selected on conscientiousness and
emotional stability is compliance with existing laws and legal precedents. A key question all
employers face in their hiring practice is whether a predictor unintentionally discriminates
by screening out a disproportionate number of minorities and women. To the extent
this happens, the predictor has adverse impact, which may trigger legal action. Research
consistently demonstrates a large mean difference of approximately one standard deviation
(d- values of 1) between African Americans and whites on intelligence (Ployhart and Holtz,
2008 ). In contrast, there are relatively small subgroup differences on conscientiousness
and emotional stability. For example, recent meta - analyses (Hough, 1995 ; Foldes, Duehr, and
Ones, 2008 ; Ployhart and Holtz, 2008 ) report that differences between African American,
Asian, and Hispanic subgroups versus white subgroups are quite small ( d - values around
zero). Similar non - significant differences have also been found for gender (Feingold, 1994 ;
Ployhart and Holtz, 2008 ). Thus, from a legal perspective, selecting on conscientiousness
and emotional stability (and other contextually valid personality dimensions) is advanta geous
because it does not appear to result in adverse impact.
Healthy behaviors and longevity
Conscientiousness and emotional stability also predict a number of important life outcomes.
Certainly, one of the most consequential outcomes in life is how long a person lives.
Simply stated – conscientious and emotionally stable people live longer (Friedman, Tucker,
Tomlinson-Keasey, Schwartz, Wingard, and Criqui, 1993 ; Ozer and Benet - Martinez, 2006 ).
For example, Roberts, Walton, and Bogg ( 2005 ) cite evidence that people tend to live longer
c02.indd 25 6/17/09 2:31:40 PM
25 SELECT ON CONSCIENTIOUSNESS AND EMOTIONAL STABILITY
if, as eight - year- olds, they were rated as more conscientious by parents and teachers. To put
this finding in context, the impact of conscientiousness on longevity has been shown to be
equivalent to the effect (inversely) of cardiovascular disease on longevity (Bogg and Roberts,
2004 ). Although the evidence is not as compelling, emotional stability is also associated
with longevity. For example, in a study of 285 centenarians, Martin, da Rosa, and Siegler
(2006) found that higher levels of emotional stability, high competence (conscientiousness)
and high extraversion were associated with longevity. It makes sense that emotional stability
should matter for longevity as well, because high levels of neuroticism have been associated
with increased probability of illness and behavior leading to more illness (Ozer and Benet -
Martinez, 2006 ). Smith and MacKenzie ( 2006 ) showed that neuroticism is associated with
physical health problems, such as cardiovascular disease, which in turn results in less longevity.
Furthermore, neurotic individuals have been shown to have lower resistance to stress and
spend more time ruminating about illnesses (Ozer and Benet - Martinez, 2006 ). In essence,
those with lower levels of emotional stability experience higher rates of actual illness and
are more vulnerable to illness due to how the trait shapes the person’s reaction to illness.
Goodwin and Friedman ( 2006 ) extended these findings by reporting both conscientiousness
and emotional stability are related to significant reductions in the likelihood of a wide range
of mental and physical disorders among adults in the general population.
Terracciano, Lockenhoff, Crum, Bienvenu, and Costa (2008) examined the relationship
between the Big Five and drug use in a large community sample. Compared to a sample
of “ never ” smokers, current cigarette smokers were lower on conscientiousness and higher
on neuroticism; similar but more extreme results were obtained for cocaine/heroin users.
In addition, marijuana users scored low on conscientiousness. Bogg and Roberts ( 2004 )
conducted a meta - analysis of conscientiousness - related traits and the leading behavioral
contributors to mortality in the USA including tobacco use, diet and activity patterns,
excessive alcohol use, violence, risky sexual behavior, risky driving, suicide, and drug use.
Based on 194 studies, results showed that conscientiousness - related traits were negatively
related to all risky health - related behaviors and positively related to all benefi cial health - related
behaviors. Conscientious people avoid potentially harmful/risky behaviors such as fi ghting
or other violent activities, as well as tobacco and drug consumption; instead, they engage in
activities that promote good health (e.g. exercise regularly, eat healthy diets, schedule regular
medical check - ups), and invest in work, family, and community in ways that are known to
contribute to longevity.
Collectively, these results demonstrate that conscientiousness and emotional stability
play important roles in a person’s physical condition, even how long they live, by predicting
social environmental factors and health behaviors that have meaningful effects on longevity.
Although these behaviors are not directly related to work performance, how one feels
and how long one lives will have important indirect effects. By leading healthy lifestyles,
people high on conscientiousness and emotional stability, collectively, save organizations
billions of dollars because of increased productivity associated with lower absenteeism
rates due to fewer sick days and being healthier when they are at work. People high on
conscientiousness and emotional stability also have substantially lower health care costs due
to fewer visits to the doctor and fewer and shorter hospital stays. Given the emphasis in
most organizations on reducing health care costs, one relatively inexpensive practice that
will help accomplish this is to select employees high on conscientiousness and emotional
stability.
c02.indd 26 6/17/09 2:31:40 PM
26 MURRAY R. BARRICK AND MICHAEL K. MOUNT
MEDIATORS: HOW DO CONSCIENTIOUSNESS AND EMOTIONAL
S
TABILITY PREDICT PERFORMANCE?
Motivation
Clearly, there are numerous advantages to organizations when they select applicants based on
conscientiousness and emotional stability. Another way to view their impact is to consider the
likely negative consequences to organizations that do not select employees based on consci-
entiousness and emotional stability – but all of their competitors do. Many of the applicants
that remain in the applicant pool have already been screened on these two traits and have
been found undesirable. That is, the remaining applicants are more likely to describe
themselves as lazy, irresponsible, undependable, careless, moody, lacking confi dence, stress -
prone, anxious, and depressed. Clearly, this is no way to build a productive workforce.
But how do conscientiousness and emotional stability affect performance? Earlier we
made the distinction that personality traits influence what people will do whereas intelli gence
influences what they can do. Research clearly demonstrates that motivational or will - do factors
play a central role in predicting job performance (e.g. Mitchell and Daniels, 2003 ). Although
there are many ways to conceptualize motivation, the three most commonly studied
approaches are goal - setting theory, expectancy theory, and self - effi cacy theory. According
to goal - setting theory, the process of setting goals leads to greater performance because
it directs effort and attention, increases time on task, leads to greater persistence, and pro-
vides feedback about one ’s performance. It also helps people devise strategies for attaining
the goals; and once the goals are achieved, people feel more satisfied due to a greater
sense of accomplishment. Thousands of laboratory and field studies conducted in a wide
variety of settings using many different tasks demonstrate that the effects of goal setting
on performance are positive, potent, and robust (Locke and Latham, 2005 ; see Chapter 9 ,
this volume). With respect to expectancy theory, higher performance will result when
people believe that their effort leads to better performance and when they believe higher
performance leads to rewards they value. Self - efficacy theory posits that individuals who see
themselves as competent, worthy, and confident interpret their environment in positive ways
that infl uence work performance. These positive perceptions infl uence a person’s beliefs that
he or she can successfully cope with work’s (and life ’s) exigencies.
Judge and Ilies ( 2002 ) conducted a meta - analysis to investigate the relationships among the
Big Five personality dimensions and these three central theories of motivation. They found
that the two strongest and most consistent correlates of performance motivation across the
three motivation approaches were emotional stability and conscientiousness (extraversion was
also a consistent predictor but the relationships were weaker). These results are important
because they show that conscientiousness and emotional stability predict performance by
increasing individuals ’ motivation levels. These findings are consistent with what we would
expect from findings pertaining to the validity of the two traits in predicting performance.
Conscientiousness and emotional stability are the best predictors of performance and because
motivation is a major determinant of performance, it would be expected that these two traits
are also the best predictors of motivation. Thus conscientiousness and emotional stability
affect performance directly and indirectly through their effects on motivation processes.
Results from other studies support these findings. For example, meta - analytic research
conducted by Mount and Barrick ( 1995 ) showed that conscientiousness correlates highly
c02.indd 27 6/17/09 2:31:40 PM
27 SELECT ON CONSCIENTIOUSNESS AND EMOTIONAL STABILITY
with the amount of effort exerted. Although the amount of effort expended is related to high
levels of motivation, they are not identical concepts. Effort is multifaceted and includes both
the amount of time as well as the intensity of the time spent on the task, i.e. the cogni tive
effort expended to focus and concentrate on the task at hand. Conscientious people spend
more time on task, which leads to greater quantity of output and higher performance
(Barrick, Mount, and Strauss, 1993 ). Greater time on task also provides more opportunities to
practice and provides more exposure to a wider variety of problems. Both of these increase
job knowledge, which in turn increases performance because, as discussed in the previous
chapter, job knowledge is highly correlated with job performance.
Conscientious people are also more dependable and this leads to higher perform-
ance. They plan and organize their work and are careful, thorough, and detail oriented.
Conscientious individuals are more likely to perform tasks correctly the first time and are
more likely to spot problems and errors in processes and output. This leads to fewer errors
and enables highly conscientious employees to produce better quality work (Mount and
Barrick, 1995 ). These findings are especially relevant as they are consistent with the survey
findings of 400 employers discussed earlier, which showed one of the two most important
workplace skills that employers desire is work ethic/professionalism.
Generally speaking, similar motivational mechanisms apply to emotional stability. Viewed
from the negative pole, neurotic people are not able to control their emotions and moods;
consequently, they cannot maintain focus and concentration on the task at hand especially
under stress or in crisis situations (e.g. Kanfer and Heggestad, 1997 ). This lack of attention
can lead to less productivity, more errors, and hence lower performance. Those prone
to greater anxiety and insecurity (low on emotional stability) tend to be fearful of novel
situations, be more concerned about failure, and are more susceptible to feelings of
dependence and helplessness ( Judge and Ilies, 2002 ). Those who experience greater and
more frequent negative emotions may choose to withhold effort rather than risk the potential
affective consequences of failure. Researchers label this phenomenon the “ self - handicapping ”
paradox ( Rhodewalt, 1994 ). In addition, the tendency of people to behave in this way,
particularly within the context of achievement (i.e. job) settings, is fundamental to the learned
helplessness theory of depression (Seligman, 1978 ). Taken together, these findings suggest that
the inability of neurotics to cope with fear of failure substantively impacts job performance
through the inhibitory effects on motivational levels. In contrast, employees scoring high on
emotional stability are likely to be steady, calm, and predictable, which helps them obtain
more commendations and recognition at work. In turn, commendations along with fewer
disciplinary actions and reprimands have been linked to higher performance ratings (Borman,
White, Pulakos, and Oppler, 1991 ).
Job satisfaction
Motivation is only part of the explanation as to why these two traits lead to more successful
behavior at work. Another reason to select on conscientiousness and emotional stability
is that they are related to work- related attitudes, which in turn have been shown to affect
performance. For example, conscientiousness and emotional stability are positively related
to job and career satisfaction ( Judge, Heller, and Mount, 2002 ; Ng, Eby, Sorensen, and
Feldman, 2005 ). Judge, Higgins, Thoresen, and Barrick ( 1999 ) found that conscientiousness
and emotional stability assessed at an early age (12 – 14) were strong predictors of overall job
c02.indd 28 6/17/09 2:31:41 PM
28 MURRAY R. BARRICK AND MICHAEL K. MOUNT
satisfaction in late adulthood, even after controlling for clinicians ’ ratings of extraversion,
openness to experience, and agreeableness. Furthermore, Judge et al. ( 2002 ) conducted a
meta - analysis of the relationship of traits from the FFM model of personality to overall
job satisfaction. The two personality traits that correlated highest with job satisfaction were
neuroticism (negatively) and conscientiousness. In turn, job satisfaction has been shown to
be positively related to job performance, which shows that another way these two traits
relate to performance is through their relationship to job satisfaction.
Commitment
Another attitudinal variable that is closely related to job satisfaction is organizational
commitment, which is of interest to organizations because it predicts who is likely to leave
the organization rather than help the organization reach its objectives. Organizational
commitment refers to a person’s involvement with the organization, feelings of obligation
toward the organization and perceived costs associated with leaving the organization. One
meta - analysis of the influence of affect on job attitudes reports results between organizational
commitment and only two personality traits, extraversion and emotional stability (Thoresen,
Kaplan, Barsley, Warren, and De Chermont, 2003 ). This study shows neurotic individuals
are less satisfied, less committed to the organization, and have higher turnover intentions.
Erdheim, Wang, and Zichar ( 2006 ) found that conscientiousness is also related to one
component of organizational commitment, continuance commitment. They reasoned that
conscientiousness relates to continuance commitment because it represents a general work-
involvement tendency that provides increased opportunity for an employee to obtain formal
(e.g. pay, promotion) and informal work rewards (e.g. recognition, respect). Conscientious
employees earn more of these rewards, which leads to heightened levels of continuance
commitment because of the costs of leaving an organization. Zimmerman ( 2008 ) supports
this conclusion by showing that these two traits are the best predictors of intent to quit.
Life satisfaction
Conscientiousness and emotional stability are also among the strongest personality - based
predictors of subjective well - being or life satisfaction (DeNeve and Cooper, 1998 ; Steel,
Schmidt, and Schulz, 2008 ). It has been argued that conscientiousness plays a major role
in both job and life satisfaction because conscientious behavior is instrumental in attaining
outcomes such as career success that achievement - oriented people value (McCrae and Costa,
1991 ). Schmutte and Ryff ( 1997 ) concluded that those high in conscientiousness are more
satisfied because they achieve a heightened sense of control and competence through their
diligent and responsible behavior. Thus conscientiousness is instrumental in attaining desired
outcomes and fostering control, which leads to greater life satisfaction.
The effects of emotional stability on satisfaction are complex and are best viewed
from the negative pole (i.e. neuroticism). People who suffer from low emotional stability
experience greater distress and reduced job and life satisfaction because they experience
more adverse events, and react negatively and more strongly when such problems occur.
Neurotic individuals are unable to effectively cope with stress due to their reliance on emotion -
and avoidance - oriented coping styles. Higher levels of emotional stability result in greater
satisfaction because stable people have more confidence to approach stressful work, have a
c02.indd 29 6/17/09 2:31:41 PM
29 SELECT ON CONSCIENTIOUSNESS AND EMOTIONAL STABILITY
more positive view of themselves, others, and the world around them, and do not let nega-
tive emotions and dysfunctional thought processes distract them from the task at hand.
Overall, these results show that conscientiousness and emotional stability are fundamentally
important to success at work, but are also important to satisfaction and commitment at work
as well as one ’s overall satisfaction in life. It is not an exaggeration to say that conscientious-
ness and emotional stability are fundamentally important to overall life success.
EXCEPTIONS TO THE PRINCIPLE
The general principle in this chapter is that individuals should be selected on their level of
conscientiousness and emotional stability. However, this does not mean that these are the
only valid personality dimensions that predict performance. A subprinciple of this chapter is
that individuals should be selected on other personality dimensions according to the specifi c
requirements of the job and/or the nature of the criterion. Research has shown that the
other three personality dimensions in the FFM model (agreeableness, extraversion, and
openness to experience) are relevant in some jobs or for some specific types of criteria. To
clearly identify when these relationships are likely to be non - zero, practitioners need to focus
more on job requirements, demands, or what now are labeled competencies. This does not
imply an extensive, time - consuming, content - specific job analysis. Rather, it suggests that
the relevance of these personality traits depends on the requirements and competencies
generally demanded by the job to achieve successful job performance. For example, if the
job requires extensive interpersonal interaction of a cooperative nature, agreeableness
would be expected to be an important predictor. In fact, recent research demonstrates that
agreeableness is the single best predictor of teamwork and is also related to service
orientation (Bell, 2007 ; Mount et al., 1998 ; Peeters et al., 2006 ). Those employees who are
more cooperative, caring, tolerant, flexible, and trusting (i.e. high in agreeableness) are likely
to be more successful in teams.
In contrast, in jobs where the nature of the interpersonal interaction is competitive or
requires persuasion or negotiation, being assertive, ambitious, energetic, and gregarious
(i.e. highly extraverted) is expected to be a highly relevant set of personality traits. Thus,
extraversion has been found to be a valid predictor of success in sales and management
jobs (Barrick et al., 2001 ). Hogan and Holland ( 2003 ) reported extraversion (measured using
ambition) was an important predictor for criteria where “ getting ahead ” of others was an
important outcome in the job. Finally, it would be expected that companies who are seeking
employees who are fl exible and highly adaptive to the rapid changes frequently encountered
at work would select on openness to experience. There is some limited evidence to support
this. For example, Pulakos, Schmitt, Dorsey, Arand, Hedge, and Borman ( 2002 ) and LePine,
Colquitt, and Erez ( 2000 ) found that openness to experience is positively correlated with
adaptive performance. Further, as one would expect, employees higher on openness to
experience tend to have higher training performance than those low in openness (Barrick
et al., 2001 ; Salgado, 1997 ). Thus, being imaginative, innovative, curious, intellectual, with
broad interests (i.e. high on openness to experience) appears to make one “ training ready,”
which is relevant for training success. It should also be noted that trainees scoring higher on
extraversion have been found to be more successful during training. This has been attributed
to extraverts ’ increased and more active participation during training.
c02.indd 30 6/17/09 2:31:41 PM
30 MURRAY R. BARRICK AND MICHAEL K. MOUNT
Although we advocate that organizations should always select employees on conscientious-
ness and emotional stability, there are some circumstances where this general principle
oversimplifies the relationships between these two personality traits and job performance. In
reality, our behavior is influenced by a constellation of personality traits represented by the
Big Five traits and these traits (and other attributes of individuals) may interact to predict
performance. For example, in four different samples Witt and Ferris ( 2003 ) found that the
relationship between conscientiousness and interpersonal job performance depended on
workers ’ social skills. The relationship was stronger among workers who are higher rather than
lower in social skill. Further, Witt, Burke, Barrick, and Mount ( 2002 ) found that in jobs with
frequent, cooperative interpersonal interactions, the relationship between conscientiousness
and job performance depended on the level of agreeableness. The relationship was stronger
for persons high in agreeableness than for those low in agreeableness. Similarly, Barrick,
Parks, and Mount ( 2005 ) found that among high self - monitors (i.e. individuals who monitor,
adjust, and control their behavior to make a favorable impression on others), the relationships
between emotional stability and supervisory ratings of interpersonal performance decreased,
and these effects were replicated using peer ratings of interpersonal performance. Collectively,
these results illustrate that the relationship of personality traits to performance can be
influenced by other attributes of the individual. Thus, although conscientiousness and
emotional stability predict job performance across jobs, the magnitude of the relationship
may vary depending on other personality traits as well as the specific component of job
performance being pre dicted. Accounting for interactions between personality variables
may further enhance prediction from these personality variables.
IMPLEMENTING THE PRINCIPLE
The general principle that we have discussed is that employers should select applicants
who are hardworking, dependable, achievement striving (i.e. conscientious) as well as calm,
tolerant of stress, able to handle anxiety, and avoid excessively worrying or ruminating (i.e.
emotionally stable). This is not a particularly surprising statement; however, a necessary fi rst
step before a principle can be implemented is that it must be well understood. In this vein,
much progress has been made in the past decade in understanding how conscientiousness
and emotional stability relate to job performance. Equally important to the implementation
of these principles has been the contribution of industrial – organizational psychologists to the
development of reliable and valid measures of these constructs.
The use of personality assessment to select applicants requires collecting “ personal ”
data. To make sure that accurate data are collected in a fair manner, attention must be given
to the relevance of various personality traits and some consideration of the “ demands ” of
the applicant setting. Implementation requires that the organization accurately identifi es
and measures applicant qualifications relative to job requirements. Thus, before assessing
personality traits, a job analysis should be conducted to identify critical competencies and
job requirements. By understanding the critical requirements of the job, one will recognize
which personality traits are relevant predictors, in addition to conscientiousness and emotional
stability. However, some consideration must be given to the “ job ” itself. Today, organizations
are moving away from the use of narrow, well - defined jobs and towards broader, less well -
defined, more amorphous jobs, with constantly changing content. The changing structure of
c02.indd 31 6/17/09 2:31:41 PM
31 SELECT ON CONSCIENTIOUSNESS AND EMOTIONAL STABILITY
jobs implies there will be greater emphasis on those traits and qualities that are valid for
all jobs (intelligence, conscientiousness, and emotional stability). Nevertheless, it will be
desirable to select on the other three personality traits (extraversion, agreeableness, and
openness to experience) when those traits are valid predictors of requirements for critical
tasks likely to be encountered by people being hired.
Once it is known which specific traits will be assessed, consideration must also be given to
the best means for assessing personality. Research illustrates that co - workers, customers, and
supervisors at work can rate a person’s personality, and those assessments have been found
to predict job performance better than self - reports of personality. For example, Mount,
Barrick, and Strauss ( 1994 ) found that the validity of co - worker and customer ratings of
conscientiousness were nearly twice as large as self - ratings when predicting supervisor ratings
of performance. These predictive validities have since been replicated by others (Small and
Diefendorff, 2006 ; McCarthy and Goffin, 2001 ; Taylor, Pajo, Cheung, and Stringfi eld,
2004 ). Huffcutt, Conway, Roth, and Stone ( 2001 ) report that interviewers often assess
basic personality during the employment interview and found interviewer ratings of traits,
including conscientiousness and emotional stability, are meaningfully related to later job
performance. Thus, observer ratings of personality, even after a relatively short interview,
predict later job performance and are larger than those we have historically found with self -
reports. The magnitude of these relationships approaches the predictive validity of general
intelligence. Zimmerman, Triana, and Barrick ( 2007 ) found that when candidates are asked
to nominate up to three referents during the application process, these observer ratings of
conscientiousness and emotional stability significantly predict job performance and team
performance. Hence, there is even evidence that observer ratings from referents can be used
for hiring.
Nevertheless, the most common means of assessing personality is through self - report per-
sonality tests. There are several construct valid measures of the Big Five traits. For example,
the Personal Characteristics Inventory (PCI by Mount, Barrick, Laffitte, and Callans, 1999 )
is a self - report measure of the Big Five that asks applicants to report their agreement or dis-
agreement with 150 sentences. The measure takes about 30 minutes to complete and has
a 5th - to 6th - grade reading level. Another commonly used measure of the Big Five is the
Hogan Personality Inventory (HPI by Hogan and Hogan, 1995 ). Responses to the HPI can
be scored to yield measures of occupational success as well as employee reliability and service
orientation. A third alternative is the NEO Personality Inventory, which is also based on the
Big Five typology (Costa and McCrae, 1992 ). There are several versions of the NEO and it
has been translated into multiple languages.
An implementation concern in the use of personality inventories is that job applicants may
inflate their personality scores, due to the “ demands ” of the applicant setting. This concern
becomes apparent when one considers the nature of some personality items. For example,
few applicants would agree with the statement that “ others would describe me as lazy or
irresponsible at work, ” if they desperately wanted the job. Given the near impossibility of
verifying responses to some of these questions, the possibility that impression management
influences responses is quite real. In fact, research suggests applicants do manage impressions,
as scores are higher by one - half standard deviation between applicants versus non - applicant
settings. Given that a job is on the line when applicants complete a personality test, the
tendency to enhance their impression is undeniable. Nevertheless, research clearly shows
(Barrick and Mount, 1996 ; Ellingson, Sackett, and Connelly, 2007 ; Hogan, Barrett, and
c02.indd 32 6/17/09 2:31:42 PM
32 MURRAY R. BARRICK AND MICHAEL K. MOUNT
Hogan, 2007 ; Ones, Dilchert, Viswesvaran, and Judge, 2007 ; Schmitt and Oswald, 2006 )
that impression management does not significantly detract from the predictive validity of
the tests in actual applicant settings. However, both criterion - related validity and construct
validity are affected in those studies where participants (mostly students) are instructed to fake
good. These findings create a paradox. With respect to employment decisions, the biggest
problem is that the rank order of applicants on personality traits such as conscientiousness
and emotional stability may change due to differences in faking; at the same time, faking
does not substantially change the validity of the traits in predicting performance. Thus, even
though it has yet to be shown that faking undermines the predictive validity of personality
tests in selection, there continues to be considerable debate about this issue in the literature.
One important implication from these findings is that practitioners should not rely on norms
based on incumbent samples, as they will tend to be one - half standard deviation lower than
norms derived from incumbent samples.
In sum, significant progress has been made in understanding the magnitude of the
relationship between conscientiousness and emotional stability to job performance and
the processes by which these constructs affect performance. Successful implementation
of the principles we advocate requires reliable and valid measure of both conscientiousness
and emotional stability. Over the past decade several construct valid measures of the fi ve
factor taxonomy of personality have been developed. Nonetheless, additional research
is needed to further develop and refine these measures to overcome potential problems
associated with impression management and socially desirable responding.
CASE EXAMPLES
Relationship of conscientiousness and emotional
stability to career success
A recent study ( Judge et al., 1999 ) investigated the relationship between traits from the
Big Five model of personality to success in careers spanning over 50 years. The ability to
predict success 50 years after assessing personality provides a rigorous test of the utility of
selecting applicants using conscientiousness and emotional stability. The data for this study
were obtained from the Intergenerational Studies, administered by the Institute of Human
Development, University of California at Berkeley. The sample was derived from children
born in Berkeley, California, in 1928 and 1929. Many measurements were collected from
participants over the 60 - year course of the study. For example, there were two studies
during later childhood (11 – 13 and again 16 – 18), as well as three major follow - up studies
conducted when participants were in early adulthood (30 – 38), middle age (41 – 50), and in
late adulthood (53 – 62). In addition to collecting personality and intelligence test data, the
subject ’s job satisfaction, income, and occupational status were collected during each of
these studies. Thus, the records were rich with personality and career data, and comparisons
were made across data collected at five different points in time (ranging from childhood to
late adulthood).
Both childhood and early adulthood assessments of personality revealed enduring rela-
tionships between personality traits and later career success. For example, childhood assess-
ments of conscientiousness and emotional stability predicted job satisfaction, income, and
c02.indd 33 6/17/09 2:31:42 PM
33 SELECT ON CONSCIENTIOUSNESS AND EMOTIONAL STABILITY
occupational status, even in late adulthood. These results show that conscientiousness and
emotional stability measured early in life were effective predictors of satisfaction and suc-
cess in one ’s later career, even over a 50 - year time span. Results also demonstrated that
these two personality traits explained significant incremental variance in these measures
of career success, even after controlling for the influence of intelligence. Taken together,
these results show that highly conscientious and emotionally stable children earned higher
salaries, were more satisfied with their work, and attained higher positions in the social
hierarchy later in life. Obviously, organizations will be better off selecting individuals who
are conscientious and emotionally adjusted, as they will be rewarded by those decisions
with higher performance and more committed employees for years to come.
The generalizability of conscientiousness and
emotional stability as predictors
The Army conducted a large - scale study spanning seven years (the Selection and Classi fi -
cation Project or Project A) to investigate how the contributions of selection could maximize
performance within the constraints of one of the largest operational personnel systems in
the world. The Army personnel system includes over 276 jobs and hires, almost exclusively,
inexperienced and untrained persons to fill them. A major goal of Project A was to develop
a battery of predictor measures that would best serve the needs of all the jobs in the entire
selection system for entry - level enlisted personnel. Thus, this project examined all of the
major domains of individual differences that had potential for generating useful predictor
variables. Several versions of the test battery were developed and examined in an iterative
sequence, with each round of testing involving thousands of recruits or enlisted personnel.
Rather than review the extensive list of predictors examined, interested readers are referred
to Peterson, Hough, Dunnette, Rosse, Houston, Toquam, and Wing ( 1990 ). Suffice it to say
that the range of individual differences was extraordinarily comprehensive, ranging from
administrative/archival records to training achievement tests.
The study also rigorously modeled job performance to better understand what
these individual differences were predicting. Given the large number of jobs examined,
Project A determined whether a single model of performance would be stable across
these jobs. Multiple methods were used to generate over 200 performance indicators of
a subsample of jobs. An iterative procedure resulted in the identification of fi ve broad
performance dimensions that were found in all jobs. Two of these performance measures
focus on specific technical competence called core technical proficiency and general
soldiering proficiency. While the former dimension appears to be a basic performance
component for any job (core task proficiency), the latter dimension would almost surely
be specific to the military. The analysis also identified three non - job - specifi c performance
dimensions that are more under motivational control. These are called effort/leadership,
maintaining personal discipline, and physical fitness/military bearing. Again, while
military bearing is unique to the military, the other two dimensions are quite likely basic
performance components of almost any job. Although job performance was found to be
multidimensional, an overall decision could scale each performance measure by its relative
importance for a particular personnel decision or job.
The findings (McHenry, Hough, Toquam, Hanson, and Ashworth, 1990 ) from this
large - scale project were that intelligence tests provided the best prediction of job - specifi c
c02.indd 34 6/17/09 2:31:42 PM
34 MURRAY R. BARRICK AND MICHAEL K. MOUNT
and general task proficiency (core technical proficiency and general soldiering profi ciency),
whereas the personality composites, particularly those traits measuring conscientiousness
and emotional stability, were the best predictors of giving extra effort and leadership,
exhibiting personal discipline, and physical fitness and military bearing. The study also
illustrated the incremental validity contributed by other predictors over intelligence. The
greatest amount of incremental validity over intelligence was generated by the personality
measures, especially when predicting effort and leadership, personal discipline, and physi-
cal fitness and military bearing. These results show the generalizable value of using con-
scientiousness and emotional stability for purposes of selection.
CONCLUSION
The general principle in this chapter is that organizations should select employ-
ees based on their conscientiousness and emotional stability. A subprinciple is that
organizations should also select on agreeableness, extraversion, or openness to experi-
ence when they have been shown to be relevant for specific criteria or require-
ments of the job. Hiring applicants who are more intelligent (see Chapter 1 ) will
result in employees who are capable of acquiring more work- related facts and prin-
ciples as well as greater procedural knowledge and skill. This contributes to job suc-
cess, particularly on the core substantive or technical tasks central to the job. But
hiring smart people is not enough. Hiring applicants who are more conscientious
and emotionally stable will result in employees who have a stronger work ethic –
they are predisposed to exert greater effort at work, to persist at work for a longer
period of time, and to cope more effectively. In addition, these employees are likely
to be better team players and are more collaborative – they are better citizens, and
are more responsible and helpful to others at work. Further, they are less likely to
engage in counterproductive behaviors at work. They also have more positive atti-
tudes about work and life in general and lead healthier lifestyles, which leads to
increased work productivity and reduced health care costs. In conclusion, hiring
people who work smarter (select on intelligence), and who work harder and cope
better (select on conscientiousness and emotional stability), will lead to increased
individual productivity which in turn will lead to increased organizational effective-
ness every single day the person (reliably) shows up to work.
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EXERCISES
Selecting applicants for entry level bank teller positions
You are the human resource manager for a large financial institution. You have been
asked to recommend methods for selecting applicants for entry level bank teller positions.
It is especially important that tellers have a strong work ethic, display integrity, interact
well with others and are accurate in their work. Consequently, you recommend that the
foundation of the selection program should be the personality traits of conscientiousness
and emotional stability. List and discuss five desirable employee behaviors that will likely
result from selecting employees on conscientiousness and emotional stability. Here are
some questions you may want to address in your answer:
(a) What skills do all new entrants to the workforce need in order to be successful in the
workplace?
(b) Which of these skills are especially important for bank tellers to be successful?
(c) How do conscientiousness and emotional stability infl uence these critical behaviors?
(d) Are there personality traits other than conscientiousness and emotional stability (e.g.,
agreeableness, extraversion or openness) that may be useful when selecting for the
entry level bank teller positions?
Convincing a high level executive
You are the human resources director at a large firm and you have been asked to design
a system for selecting managers. An integral part of your recommended hiring plan is
the use of personality tests. A high level executive in the firm hears about your plan and
expresses concerns about the use of personality tests. He took a personality test once and
he believes it did not accurately describe his personality. He also says that personality tests
can’t be accurate because “ everybody knows you can fake these things. ” What would you
tell him? What is the basis for your answer?
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c03.indd 41 6/17/09 2:32:23 PM
3
Structure Interviews to Recruit
and Hire the Best People
CYNTHIA KAY STEVENS
Organizations use employment interviews as a primary means for applicants and hiring
managers to meet and gather information from each other for the purpose of making
selection and job choice decisions. When applicants or employers have limited time and
many alternatives, interviews offer a fl exible, efficient format in which to exchange infor-
mation. Unlike other selection devices (e.g. tests, biodata inventories), interviews don’t
require expert advice and large samples for development and implementation. They typi-
cally do not raise the legal challenges and equal employment opportunity concerns that
standardized tests do. Moreover, interviews can be easily adapted to accomplish different
goals: introducing applicants and employers, attracting applicant interest, screening out
unsuitable candidates, clarifying the rank order of finalists. Such efficiency and fl exibility
may account for its popularity; interviews (along with reference checks) are the most com-
mon selection procedure used across a wide range of jobs and industries (BNA, 1988; see
Dipboye, 1992 ).
Paradoxically, their flexibility also makes it difficult to use interviews effectively. Interviews
can vary widely in terms of how many applicants and interviewers are present, question
types and sequences, topics covered, how much training and information interviewers and
applicants have beforehand, consistency of practices across applicants, and how interviewers ’
evaluations are used. Some interview formats are better than others at achieving selection
and recruitment goals; mismatches between the format and interview goals can impair the
quality of managers ’ and applicants ’ decisions.
Empirical research has focused on how well interview ratings predict actual job perform-
ance, as measured by the correlation coefficient between interviewers ’ ratings and hired
applicants ’ job performances. Although this research has offered useful insight into the
interview formats needed to make good hiring decisions, the use of interviews to achieve
other organizational goals (such as attracting top applicants) suggests the need for a
broader perspective on how to design effective interviews.
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42 CYNTHIA KAY STEVENS
At issue is the need to make good joint decisions – that is, to exchange accurate infor-
mation that enables both applicants and organizations to make the best decisions given
the alternatives available to each. To do this, managers can structure interviews so that they
both provide and collect valid information for use in making decisions.
The purpose of this chapter is to review and summarize what we know about improv-
ing decision making in employment interviews. A key theme of this chapter is that, by
understanding the factors that impair information quality or exchanges, managers can
structure interviews to improve both decision quality and hiring and recruitment outcomes.
I begin by describing decision - making research and the factors that affect applicants ’ and
inter viewers ’ judgments and decisions. Then, I discuss nine subprinciples for designing
interviews to improve decision making. Finally, I conclude with examples of how poorly
designed interviews might be restructured to enable both applicants and interviewers to
make better decisions.
DECISION-MAKING RESEARCH
Decision theorists (see Chapter 25 , this volume) have converged on the idea that people use
one of two processes for making decisions: a rapid, largely unconscious, implicit approach in
which choices are made with minimal effort, or a slower, deliberative, controlled approach
in which alternatives are consciously weighed and compared (Evans, 2008 ). Particularly when
facing numerous alternatives, decision makers will use these processes sequentially – fi rst auto-
matically screening out candidates that fail to meet some possibly arbitrary criteria, then
concentrating their efforts on a closer, more conscious, evaluation of those that remain (e.g.
Payne, Bettman, and Johnson, 1988 ; Svenson, 1992 ). This two - stage approach is common in
both hiring and application decisions, in which “ unsuitable ” choices are eliminated quickly
and without much conscious thought, and conscious effort is focused on a smaller subset. For
example, both applicants and hiring managers often make early decisions about whether to
interview on the basis of limited information (e.g. presence of grammatical errors in r é sum é s;
company reputation or familiarity), and then use later information (including that gained from
interviews) to evaluate each other more thoroughly.
Within this dual - process approach, researchers have identified many cognitive, moti-
vational, and contextual factors that affect decisions. The cognitive factors include how decisions
are framed (e.g. as the potential gain or possible loss of good employees; see Tversky and
Kahneman, 1981 ), a number of heuristics or mental shortcuts used to evaluate alternatives
(e.g. comparing the similarity of candidates to current employees to judge suitability – see
Tversky and Kahneman, 1974 ; or considering r é sum é length to judge applicant quality –
see Chinander and Schweitzer, 2003 ), and a tendency to look for information that confi rms,
rather than tests, one ’ s expectations (e.g. seeking answers that “ screen in ” rather than rigor-
ously evaluate a favored candidate; see Snyder and Swann, 1978 ). Motivational factors include
decision makers ’ goals, such as the desire to grow and develop versus to maintain a steady
state (e.g. to hire someone with potential versus an established performer; see Brockner and
Higgins, 2001 ), a desire to experience happiness or avoid disappointment with the de cision ’ s
outcome (see Mellers, 2000 ), or the desire to justify a preferred conclusion (see Boiney,
Kennedy, and Nye, 1997 ). Finally, contextual factors include the conditions or circumstances
under which people make decisions, such as how many alternatives are available, what their
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43 STRUCTURE INTERVIEWS TO RECRUIT AND HIRE THE BEST PEOPLE
characteristics are relative to each other, and the timing of the decision (see Hsee, Blount,
Loewenstein, and Bazerman, 1999 ). For example, evaluations shift depending on the set of
alternatives available: an applicant with average qualifi cations will be evaluated quite differ-
ently depending on whether they are the only candidate available or one of several candi-
dates all of whom have either strong or weak qualifi cations.
In summary, applicants and hiring managers will use a combination of rapid/low effort
and slower/deliberative decision processes when evaluating their choices. An examination
of how the interview context and both individuals ’ cognitive processes and motivations
influence these types of decision making enables us to identify strategies for improving the
quality of their decisions.
DECISION MAKING IN INTERVIEWS
Interviews enable applicants and employers to meet – either face to face or via technology –
to exchange information that will allow them to make decisions about each other. As such,
it is useful to explore what we know about the context, cognitive demands, and moti-
vations of each party and how these factors affect their evaluations.
Interviewers ’ decisions
Available studies show that interviewers ’ judgments can be swayed by many of the cogni-
tive, motivational, and contextual factors that affect other types of decisions. For example,
interviewers often judge applicants ’ suitability using implicitly held stereotypes about race,
gender, age, or disability status (e.g. Hitt and Barr, 1989 ; Reilly, Bockettie, Maser, and
Wenet, 2005 ; Segrest Purkiss, Perrew é , Gillespie, Mayes, and Ferris, 2006 ), although the
impact of some factors such as applicants ’ race may be less than that found for standard-
ized tests (Huffcutt and Roth, 1998 ). Some evidence suggests that interviewers weigh neg-
ative information about applicants more heavily than they do positive information (Macan
and Dipboye, 1988 ), but the role that negative versus positive information plays depends
on what sorts of judgments must be made and how involved interviewers are in the decision
process (see Posthuma, Morgeson, and Campion, 2002 ).
Several features of the interview context and its goals can also shift interviewers ’ moti-
vation and thus their evaluations. Research shows that when determining applicant suit-
ability, interviewers often unconsciously consider personal qualities (e.g. interpersonal
skills or appearance; see Huffcutt, Conway, Roth, and Stone, 2001 ; Pingitore, Dugoni,
Tindale, and Spring, 1994 ), how similar they are to applicants (e.g. Kristof - Brown, Barrick
and Franke, 2002 ), and how well they think applicants would fit with their organization’s
culture (Cable and Judge, 1997 ), regardless of whether others in their organization would
agree with their assessments or whether those qualities are important for successful job
performance. This subjectivity leaves room for applicants to present themselves as likable
or similar to interviewers as a strategy to obtain higher interviewer evaluations (Levashina
and Campion, 2007 ). Further, some studies have suggested that interviewers may use
r é sum é and background information about applicants to form preliminary impressions
about their suitability, and then elicit information during interviews that confi rms these
early impressions (Dougherty, Turban, and Callender, 1994 ), although additional careful
c03.indd 44 6/17/09 2:32:24 PM
44 CYNTHIA KAY STEVENS
studies of this issue are needed. Contextual factors such as whether applicants are evalu-
ated sequentially (versus compared to one another at the same time) and the number of
openings (few versus many) also affect interviewers ’ judgments, such that applicants are
held to higher standards when evaluated as part of a larger pool or when there are fewer
openings available (Huber, Northcraft, and Neale, 1990 ).
Because interviewers ’ evaluations can be affected by so many extraneous factors, an
important question is whether interviewers in general can do a reasonably accurate job
of predicting which applicants will perform well if hired. One possibility is to use at least
three or four interviewers to independently interview each applicant; averaging these ratings
yields good prediction regarding likely job performance (Schmidt and Zimmerman,
2004 ). If it is not possible to arrange for multiple interviews for each applicant, other stud-
ies have suggested that there are individual differences in interviewer accuracy – that is,
some interviewers consistently make better predictions than others (Dougherty, Ebert, and
Callender, 1986 ; but see Pulakos, Schmitt, Whitney, and Smith, 1996 ).
Structured interviews
Several modifications have shown promise for improving interviewers ’ accuracy, includ-
ing training interviewers (Dougherty et al., 1986 ), having them set goals to form accurate
impressions (Neuberg, 1989 ), and holding them accountable for their decisions and rec-
ommendations (Motowidlo, Mero, and DeGroot, 1995 ). However, the largest and most
consistent gains in predicting which applicants will perform well on the job seem to come
from structuring interviews – that is, standardizing some aspects of the questions asked,
delivery, and evaluation process. Across interviewers, the use of structured interview for-
mats leads to better prediction of job performance (correlations range from .35 to .62)
than does the use of unstructured interviews (correlations range from .14 to .33; see
Huffcutt and Arthur, 1994 ; McDaniel, Whetzel, Schmidt, and Maurer, 1994 ).
Applicants ’ decisions
Although less research has examined applicants ’ decision, the existing studies do suggest
that many cognitive, motivational, and contextual factors can sway applicants ’ judgments.
For example, applicants are concerned with finding jobs and organizations whose attributes
provide a good fit with their interests and needs ( Judge and Cable, 1997 ). Given that they
often have little information to determine whether a given job opportunity provides a good
fit, applicants may rely on signals to infer these attributes, such as whether the organiz-
ation has a good reputation (Highhouse, Zickar, Thorsteinson, Stierwalt, and Slaughter,
1999 ), their beliefs about the organization’ s personality (Slaughter, Zickar, Highhouse, and
Mohr, 2004), and whether the interviewer was warm and personable during the interview
(Chapman, Uggerslev, Carroll, Piasentin, and Jones, 2005 ). Some data suggest that appli-
cants dislike structured interviews and report being less likely to accept job offers from
organizations that use them (Chapman and Rowe, 2002 ) although the data are mixed on
the latter point. Applicants also show evidence of biased judgments depending on how dif-
ficult they think it will be to obtain a job: they evaluate the opportunity more favorably
following interviews if they think they may receive fewer job offers than if they expect to
have many offers (Stevens, 1997 ).
c03.indd 45 6/17/09 2:32:24 PM
45 STRUCTURE INTERVIEWS TO RECRUIT AND HIRE THE BEST PEOPLE
Researchers have not examined whether applicants ’ decisions following interviews pre-
dicts their subsequent job satisfaction or tenure with organizations. Nonetheless, some
data indicate that interviews providing structured, realistic job information may help
applicants self - select out of jobs in which they might be unhappy, and among those who
do accept jobs, exposure to realistic job information leads to longer tenure on the job (see
Buckley, Mobbs, Mendoza, Novicevic, Carraher, and Beu, 2002 ). This effect may be lim-
ited to situations in which applicants have other job offers from which to choose, however
(Saks, Wiesner, and Summers, 1994 ).
How to structure interviews
Although interview structure is an important means for improving joint decision making,
some managers are unclear regarding what it means to structure an interview, and many
fail to see the value of increasing interview structure (Van der Zee, Bakker, and Bakker,
2002 ). Campion, Palmer, and Campion ( 1997 ) identified 15 possible content and process
dimensions on which interviews could be structured (e.g. using job analysis to determine
question content, standardizing interview lengths, using statistical procedures to combine
interviewers ’ ratings). To reduce this list, Chapman and Zweig ( 2005 ) surveyed appli-
cants and interviewers and found three primary areas that increase structure and one that
reduces it. Features that increase interview structure include question sophistication, or using
question formats known to yield valid information (such as past behavior description or
situational questions); question consistency, or asking the same questions in the same order to
all applicants; and evaluation standardization, or using the same numeric scoring pro cedures
for rating all answers. Rapport - building , or asking non - content - related questions and making
light conversation, is thought to put applicants at ease and improve their attraction to the
organization, although it may reduce interview structure and any information obtained from
applicants may be unrelated to their job performance. Their study found that interviewer
training increased interviewers ’ use of standardized evaluations and sophisticated question
formats, but had no effect on increasing consistency in questions asked. Importantly, appli-
cants found highly structured interviews to be more difficult, but this did not reduce their
intent to accept job offers.
Structuring interviews has many benefits for organizations and applicants, particu-
larly in terms of increasing the exchange of valid information to make decisions. Clearly,
there may be some tradeoffs with interviewer and applicant discretion (Van der Zee et al.,
2002 ), although the loss of control may not be as great as managers assume it will be. The
next section describes how to improve interview structure.
IMPROVING DECISION MAKING BY INCREASING
I
NTERVIEW STRUCTURE
Effectively structuring interviews to improve decision making is not difficult, but it does
require advance preparation and critical analysis. Involving interviewers in the process
of developing an interview structure can improve their job challenge and satisfaction (see
Judge, this volume). Moreover, it can communicate a greater sense of professionalism to
applicants. To assist managers in improving the quality of decisions following interviews,
I offer the following nine subprinciples.
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46 CYNTHIA KAY STEVENS
Subprinciple 1: Identify the primary goals for the
interview: recruitment, selection, or a combined focus
Goals enable people to channel their efforts in appropriate directions and gauge their pro-
gress (see Chapter 9 , this volume). They also affect interview decision making by orienting
interviewers to accomplish important tasks. Thus, interviewers need to have clear guidance
regarding the purpose of their interviews: recruiting and attracting a larger applicant pool,
screening out unsuitable applicants, or a combined focus on recruitment and selection.
Such knowledge helps them determine the appropriate structure for their interviews – in
particular, how much time should be devoted to collecting or providing information.
Subprinciple 2: Develop a set of questions – based on job analysis – that
ask about applicants ’ capacity to perform the job
All interviewers ask questions, and having a prepared set of questions with clear links to
job performance can only help applicants and interviewers by signaling what attributes
are important. To ensure that questions are relevant to the job, begin by reviewing available
job descriptions or specifications, which should state the knowledge, skills, abilities and
other characteristics (KSAOCs) needed for success, the tasks performed, and essential
work conditions. (O*Net online is a good generic source of job analysis information if job
descriptions or specifications are lacking.) Identify the KSAOCs, tasks, and work condition
requirements that are best assessed in an interview (e.g. intelligence is most effectively
and reliably measured through cognitive ability tests; see Chapter 1 , this volume), and
write questions that ask – in a non - transparent manner – whether applicants have or can
demonstrate those capabilities.
Formats. Two question formats have proven to be most effective for interviews: past behav-
ior description and situational questions. Past behavior description questions ask for examples of
past performance (e.g. “ Tell me about a time when . . . ” ), whereas situational questions ask
what applicants would do in a given situation (e.g. “ How would you deal with a situation
in which . . . ” ). As an example of assessing customer service orientation, a past behavior
description question might be, “ Tell me about a time when you had to deal with the con-
cerns of an upset customer – what was the situation and how did you respond? ” A corre-
sponding situational question would be, “ Imagine you had to deal with an upset customer
who did not receive their order when it was promised. What specifically would you do to
deal with their concerns? ” Some research suggests that, all other factors equal, past behav-
ior description questions may yield more useful information than situational questions
(Taylor and Small, 2002 ), although both formats are superior to other types of questions that
may be asked (e.g. applicants ’ opinions).
Subprinciple 3: Develop a set of scoring criteria
for evaluating applicants ’ answers
Once a set of interview questions has been written, it is extremely useful to create a set of
criteria for evaluating applicants ’ answers. Having a scoring guide ensures that, no matter
c03.indd 47 6/17/09 2:32:25 PM
47 STRUCTURE INTERVIEWS TO RECRUIT AND HIRE THE BEST PEOPLE
who conducts the interview, all applicants will be held to the same standards. Managers
can identify which responses are optimal and which are problematic by talking to job
incumbents, reviewing the work behavior of current good and poor performers, and in
some organizations examining the performance evaluations themselves to identify impor-
tant indicators. Research shows that having and using scoring criteria provides a signifi cant
and independent contribution to accuracy when predicting applicants ’ job performance
(Taylor and Small, 2002 ). To the extent that interviewers are inexperienced, providing scor-
ing guidelines can also help to make the task of conducting interviews easier.
Subprinciple 4: When interviewing, ask all applicants
the same questions in the same order
Asking all applicants the same questions in the same order helps to provide comparable
information about each applicant. It is inherently fairer, in that all applicants are given
the same opportunity to explain what they can do and why they are qualified for the pos-
ition. Some managers may resist such consistency, in that it limits their spontaneity and
can make the interviews seem more rote. However, to the extent that interviewers spend
a portion of each interview answering applicants ’ questions about their organizations, this
concern may be less problematic.
Subprinciple 5: Ask interviewers to take brief notes on each applicant
and to review their notes before rating applicants
Data concerning this recommendation are mixed: interviewers who take detailed notes
show better recall of information about applicants, but their judgments about applicants ’
performance potential are not necessarily more accurate than those of interviewers who
do not take notes (Middendorf and Macan, 2002 ). However, asking interviewers to take
some notes accomplishes several objectives: (a) it aids in holding interviewers accountable
for their recommendations, which has been shown to improve the quality of their recom-
mendations (Motowidlo et al., 1995 ), (b) it communicates an interest in what applicants
have to say, which can help when recruiting applicants, and (c) it enables interviewers to
recall applicants ’ answers when comparing or discussing job candidates.
Middendorf and Macan ( 2002 ) found that interviewers who wrote down key points
were better able to differentiate between applicants, possibly because their attention was
less divided between listening to applicants and writing. Moreover, they found that ask-
ing interviewers to review their notes prior to making ratings of applicants helped them to
make more accurate ratings. Such an approach should help interviewers to focus on what
applicants have to say, and to make ratings without the added pressure of responding to
or shielding their evaluations from applicants who are seated nearby.
Subprinciple 6: Select or train interviewers to
build rapport with applicants
Research indicates that most applicants have determined which organizations they prefer
well before their interviews (Collins and Stevens, 2002 ), but it also consistently shows that
c03.indd 48 6/17/09 2:32:25 PM
48 CYNTHIA KAY STEVENS
exposure to warm, personable interviewers improves their intentions to pursue or accept
job offers (see Chapman et al., 2005 ). Interviewers who are high in extraversion and
agreeableness are likely to be more successful in establishing rapport than are introverts
or those low in agreeableness. If it is not possible to select interviewers who are naturally
skilled at putting others at ease, interviewers can also be trained to improve their rapport -
building behavior. For example, open non - verbal behavior (e.g. eye contact, smiling, and
open body posture), welcoming statements, and a willingness to fully answer questions can
improve applicants ’ perceptions of interviewers ’ personableness.
Subprinciple 7: If interviews receive preinterview information
about applicants, make sure that it is valid
Research shows that, when interviewers have access to preliminary information about
applicants (e.g. from r é sum é s or test scores), it may prompt them to form impressions
about applicant suitability which then affects how they conduct the interview (Dougherty
et al., 1994 ). This problem has led some experts to recommend that all preinterview
information be withheld from interviewers (e.g. Dipboye, 1989 ). Although this recom-
mendation may ensure that interviews are not biased, it may not always be practical. For
example, this procedure would not enable interviewers to clarify incomplete or ambiguous
r é sum é or application information, and it may make it more difficult for interviewers to
understand fully the context for applicants ’ answers.
Thus, it is important to be aware of the problems associated with preinterview infor-
mation and to take steps to ensure that it is accurate, valid, and used appropriately. For
example, if interviews will be used for screening purposes, ensure that any preinterview
information is valid – that is, it has a reliable, statistical relationship with job perform-
ance. It is also valuable to independently verify basic information from the r é sum é , such
as degrees earned, prior employers and dates of employment, as a single phone call can
quickly eliminate unscrupulous applicants. If interviews are being used to recruit appli-
cants, access to preinterview information may help determine how best to describe the job
and organization. If interviewers ’ preinterview expectations are based on valid, accurate
information, behavioral confirmation tendencies during the interview should pose less of
a problem and may enable interviewers to shift their emphasis to recruiting promising
applicants (Posthuma et al., 2002 ).
Subprinciple 8: Ask applicants about their decision process
and criteria, and share realistic information
tailored to those processes and criteria
Just as managers are interested in applicants who fit with their organizations, applicants
typically seek organizations that provide a good fit with their interests and needs (Rynes,
Bretz, and Gerhart, 1991 ). Most applicants share similar concerns such as job type,
location, pay level, and training opportunities. However, the specific type of information
they want and how it will affect their decision process can vary across applicants as well
as within applicants over time. Thus, interviewers can structure interviews to help appli-
cants make good decisions by asking about the criteria that will be important in their
decisions and the context in which their decisions will be made.
c03.indd 49 6/17/09 2:32:25 PM
49 STRUCTURE INTERVIEWS TO RECRUIT AND HIRE THE BEST PEOPLE
There are several benefits to this form of interview structure. First, interviewers can
offer realistic information tailored to applicants ’ interests, rather than giving a standard
“ speech ” about their organizations ’ positive attributes. To the extent that other fi rms do
not provide such individualized approaches, this practice may help firms gain an advan-
tage in attracting applicants ’ interest. A second benefit is that such information can
help interviewers estimate the probability that an offer would be accepted if extended.
Applicants for whom one ’s organization does not meet important criteria are less likely to
accept offers, and firms that identify such mismatches early may focus their effort toward
pursuing other attractive applicants who are likely to accept offers.
Interviewers may also find it helpful to inquire about applicants ’ decision process,
particularly the number of offers they expect or have received. This contextual factor
has dramatic effects on decision making in other contexts – decision makers may reverse
their preference for the same option when it is presented by itself versus as one of mul-
tiple options from which to choose (Hsee et al., 1999 ). Consistent with this, recruitment
research has shown that applicants who expect to receive fewer offers evaluate a given fi rm
more favorably after their interviews than do applicants who expect to receive multiple
job offers (Stevens, 1997 ). Interviewers thus may gain insight into how their recruitment
information will be received by asking about applicants ’ expectations for success in their
job searches.
Subprinciple 9: If it is not possible to structure interviews,
then arrange for 3 – 4 independent interviewers to
meet with each applicant
As suggested earlier, structured interviews consistently provide valid, predictive information
about which applicants are likely to perform well on the job (e.g. Huffcutt and Arthur,
1994 ). Yet, Schmidt and Zimmerman ( 2004 ) found that averaging the ratings of three
to four independent interviewers who used unstructured interviews also yielded good pre-
dictions about applicants ’ likely job performance. Thus, if it is not possible to structure
interviews, hiring managers can approximate their accuracy by obtaining and averaging
the ratings from a set of unstructured interviewers. Of course, the best situation would
be to conduct structured interviews with three or four independent interviewers – organiz-
ations would obtain high - quality information about applicants ’ capabilities, and applicants
would be able to hear multiple perspectives on what they could expect from the job and
organization if hired.
CASE EXAMPLES
Structure helps interviewers gather and disseminate information useful for making
decisions. To illustrate this process, I provide several examples from my research
(Stevens, 1998 ). The first comes from the transcript of an untrained interviewer who
was screening applicants for a large public accounting firm. Untrained interviewers ask
fewer open - ended, follow - up, and performance - differentiating questions, and they tend
to ask such questions in ways that are transparent – that is, phrased to indicate the
desired response. This interviewer ’s questions are typical of this (the numbers represent
turns at talk).
c03.indd 50 6/17/09 2:32:25 PM
50 CYNTHIA KAY STEVENS
211. INTERVIEWER: What else have you done that ah, you feel would be helpful to you
in public accounting?
212. APPLICANT: Oh, gee, as far as extracurricular? Well I was in a lot of service clubs
and, you know, I ’ve worked with people, done March of Dimes, things like that.
Just dealing with people.
213.
INTERVIEWER: How would you say your communication skills are?
214. APPLICANT: I think they ’re pretty good. I think I have pretty good communication
skills. Listening is part of it, yeah, so –
215. INTERVIEWER: Okay.
To screen applicants effectively, this interviewer could improve the information obtained
by rephrasing and following up on these questions. For example, the question about what
the applicant has done that would be helpful in a career in public accounting would yield
more helpful data if the interviewer asked follow - up questions about what roles the appli-
cant had held in various service clubs, and what specifi c things she had done for the March
of Dimes. Asking about specific instances in which the applicant had worked with other
people in these roles would provide important indications about how the applicant would
interact with clients and co - workers. Likewise, the question about communication skills
would prompt most applicants to answer that they had good communication skills – the
“ correct ” answer is transparent. Rather than asking applicants for an evaluation of their
own skills and taking that information at face value, the interviewer might instead ask
past behavior description questions about instances in which the applicant had misunder-
standings with other students or co - workers, and what she did to address those problems.
Answers to this type of question would provide more concrete data about the applicant ’s
communication skills and would allow fewer opportunities for the applicant to manage the
interviewer ’ s impression.
In contrast, the following (edited) segment shows how interviewers using past behavior
description questions can gather high quality information.
103. INTERVIEWER: . . . Now I ’d like to spend a little bit of time talking about decision
making and problem solving. Tell me about a particularly difficult decision you
had to make.
104. APPLICANT: Um, well . . . that ah, decision on the design approach, it was very dif-
ficult for me. ‘ Cause I didn’t want to – I had the authority to overrule the design
team. But I didn’t want to use that um, unless I was absolutely sure they were
wrong. I didn’t want to alienate either the architect – engineer or the design team.
And that resulted in a lot of squabbles and a lot of running back and forth nego-
tiating between people to fi nd out what – what is the best way . . .
105. INTERVIEWER: Mmm. So what were the things, some things you just considered in
your decision?
106. APPLICANT: Um, I had to consider the qualifications of the person. Ah, whether
they really knew what they were talking about. Um, another factor was there was
a definite bias between the design team and the architect – engineer. They all took
many years of, of infighting. And I had to try to consider how much of this is
just due to the fact that “ This person’s designing it so I know it ’s no good, ” as
opposed to, “ It ’s just . . . not going to work in our best interests. ”
c03.indd 51 6/17/09 2:32:26 PM
51STRUCTURE INTERVIEWS TO RECRUIT AND HIRE THE BEST PEOPLE
107.
INTERVIEWER: Okay. And so what do you . . . see then you decided where you
ended up going with . . . ?
108. APPLICANT: Design team ’ s modifications, even though it was more expensive. In the
long run, it proved to be ah, a better, um more cost effective way of operating.
Recruitment goals can also be met by structuring interviews through training and use
of standardized questions. Recruitment - oriented interviewers are less likely than screening -
oriented interviewers to receive training; given that untrained interviewers are seen by appli-
cants as less organized and less professional, this trend is unfortunate. Untrained interviewers
tended to talk more, jumping between asking and answering questions, providing unrequested
information, and digressing into non - job - related topics. This problem is illustrated in the next
example, in which an untrained interviewer sought to recruit an applicant for an insurance
sales position. Although this segment is edited, the dialog between this interviewer and appli-
cant followed the same pattern in which the interviewer did most of the talking.
25.– 31.
INTERVIEWER: Here are some reasons why you would want to choose a career
with [name of firm]. We guarantee your income while you start, develop your
own image on being your own boss, getting, ah, getting into management career
status, extra benefits, ah, and on the back here, are twelve good reasons . . . why
you would want to be an insurance agent. And, um, here is, ah, a brochure
that explains ah, the training program in general . . . terms. It ’s a lifelong train-
ing program. Um, we have, we feel, the finest training, uh, in the industry, ahh,
as a company . . . And I believe, in my district, we have ah, the fi nest training
in America simply because we use the company training in the fi rst six – twelve
months or so, and after that we go into material, we make available to you material
from the Insurance Institute of America. Now when I say make available to you,
ah, we recruit and train people from all walks of life. Some people can’t handle
the material from the Insurance Institute of America because it ’s college level
and/or they don’t have the math background or they don’t have the interest,
study skills . . . to do it. I put on six people in 19[ . . . ] and to date, ah, none of
them have taken advantage of all the material that I could give them. Because,
well, it ’s not all bad either. Some of them, three of them are college students and
they ’re doing so well that they don’t have the time, they won’t take the time to, to
attend the course. Ah, one of ’ em has gone through a couple of ’ em or attempted
to go through a couple of ’ em, but ah, nevertheless I ’ve kept my end of the
bargain and I would make it available to her and now in their second or third
year, ah, they would take it a little more serious, ah the more advanced learning
of insurance. Okay?
32. APPLICANT: Um - hmm.
33. INTERVIEWER: So we say we’ll make it available to you, if you ’re good enough
to take advantage of it, that ’s fi ne.
34. APPLICANT: Um - hmm.
This interviewer clearly had a lot of positive information about his company to convey
to applicants. Yet, his approach – doing all the talking, without finding out the applicant ’s
unique interests or criteria for making decisions – doesn’t allow him to tailor his “ pitch ” to
c03.indd 52 6/17/09 2:32:26 PM
52 CYNTHIA KAY STEVENS
her as an individual. He may or may not cover information about his company that would
be of interest to her. A smarter strategy would be to ask her questions about why she was
exploring a career in insurance sales, what she is looking for in a job or company, and what
other jobs and organizations she has considered. Not only would this approach be more
efficient in assessing her interest and communicating the information of greatest value to her,
it would also convey interest in and concern for her as an individual. This interviewer might
also spend some time talking about the less attractive aspects of being in insurance sales as a
way to make the rest of the information he provides appear more balanced and credible.
A good way to approach this issue is provided in a fi nal example, which is too lengthy to
reprint fully here. The opening was for a human resources internship rotation program in a
large conglomerate, and the interviewer determined through the r é sum é and some prelimi-
nary questions that the applicant had excellent qualifications. She then shifted the focus of
their discussion to the factors that would be important in the applicant ’s decision, and dis-
covered that his wife was applying to medical schools across the country. This enabled the
interviewer to pinpoint several divisions to which he could be assigned that were located
near his wife ’ s preferred medical schools. Note that, had she relied on a prepared speech
about the company ’s programs and benefits, she would have neglected to provide this criti-
cal information about how her company could meet this applicant ’ s needs.
CONCLUSION
Interviews are typically used as one in a set of selection/recruitment tools to make
decisions about whom to hire and which job offers to accept. Because they are fl ex-
ible, interviews can be used to accomplish multiple purposes, such as introductions,
recruitment, screening out unsuitable candidates, and so on. However, this fl exibility
can also be a stumbling block, as research shows that decision processes are suscep-
tible to many cognitive, motivational, and contextual influences that may degrade
the quality of the fi nal decision.
Increasing interview structure can help managers achieve their recruitment or
selection goals by helping to minimize the impact of irrelevant factors on inter-
viewers ’ and applicants ’ decision processes. Structuring interviews introduces some
standardization in procedures to make the judgments that follow less idiosyncratic.
Wisely structuring interviews to balance the need for standardization with the need
for interviewer and applicant discretion can ensure that both organizations and
applicants get the most out of the process.
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EXERCISES
Interviewing applicants
Imagine that you are preparing to interview applicants for a junior management
consultant – a position in which incumbents conduct organizational studies and evaluations,
design systems and procedures, conduct work simplifications and measurement studies,
and prepare operations and procedures manuals to assist management in operating more
efficiently and effectively. First, look up the necessary KSAOCs (knowledge, skills, abilities,
and other characteristics), required tasks, and common work environment conditions.
You can find a wealth of information on O*Net ( http://online.onetcenter.org ). Using the
information you find, choose three important requirements for the job and generate SIX
structured interview questions (three using the behavior description format and three using
the situational format).
c03.indd 56 6/17/09 2:32:27 PM
56 CYNTHIA KAY STEVENS
Evaluating applicant answers
For each of the questions you listed above, come up with scoring criteria to evaluate appli-
cants ’ answers. Using a scale that spans from 1 to 5, generate criteria that would help you
differentiate very poor (1), low effectiveness (2), average (3), above average (4), and extremely
effective (5) answers to your questions.
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Part II
TRAINING AND PERFORMANCE
A
PPRAISAL
c04.indd 58 6/17/09 2:33:17 PM
c04.indd 59 6/17/09 2:33:17 PM
4
Design Training
Systematically and Follow
the Science of Training
EDUARDO SALAS AND KEVIN C. STAGL
A national education crisis, employment levels topping 94%, a growing retiree bubble, and
the rapid rise of emerging market opportunities are draining an already shallow domestic
talent pool. And the scarcity of workers with cultural competence, interpersonal savvy,
and technological acumen is not just a US problem as 41% of 37,000 employers across
27 countries report experiencing human capital diffi culties (Manpower, 2007 ).
In response, US employers invest over $ 126 billion annually on training and develop-
ment initiatives (Paradise, 2007 ); more than double their $ 55 billion annual investment
just a decade ago (Bassi and Van Buren, 1998 ). Employers make sizable investments in
training because it is a powerful lever for structuring and guiding experiences that facili-
tate the acquisition of affective, behavioral, and cognitive (ABCs) learning outcomes by
employees (Kraiger, Ford, and Salas, 1993 ). In turn, learning outcomes can horizontally
transfer to the workplace and over time transfer vertically to impact key organizational
outcomes (Kozlowski, Brown, Weissbein, Cannon - Bowers, and Salas, 2000 ). In fact, sys-
tematically designed training can even help improve entire national economies (Aguinis
and Kraiger, in press).
While trillions are spent annually worldwide on training activities, 52% of employers
still report struggling to rapidly develop skills and only 13% claim to have a very clear
understanding of the capabilities they need in the next three to five years (IBM, 2008 ).
Moreover, only 27% find web - based training, and a mere 17% virtual classroom train-
ing, to be effective at meeting their needs (IBM). Perhaps this is not surprising given that
estimates suggest only 10% of training expenditures transfer to the job (Georgenson,
1982 ) and a meager 5% of solutions are evaluated in terms of organizational benefi ts
(Swanson, 2001 ). It seems now, more than ever before, there is a need for actionable
guidance on designing training systematically.
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60 E DUARDO S ALAS AND K EVIN C. STAGL
Fortunately, the science of training has benefi ted from an explosion of research activity
since the late 1990s and has much to contribute to ensuring the vitality of organizations
and the domestic and global economies they fuel. For example, Salas and Cannon - Bowers
( 2000 ) tapped the science of training to extract fundamental principles and advance tar-
geted guidance for designing systematic training in the fi rst edition of this book series.
Almost a decade later, this chapter continues the tradition by providing a translation
mechanism for stakeholders charged with fostering more effective individuals, teams, and
organizations via systematic training initiatives. Specifically, we advance a set of theories,
principles, guidelines, best practice specifications, and lessons learned that address some
of the many linkages among training problems, theories, techniques, and tools.
Our discussion follows a four phase process to designing blended training solutions.
We use our own experiences facilitating learning, and draw heavily upon the science of
training, to advance phase - specific guidelines for designing, developing, delivering, and
evaluating training solutions (Table 4.1 ). We cannot overstate the contribution of colleagues,
who represent many disciplines, to shaping our thinking on training issues. Next, we describe
the success of team training in the aviation industry and discuss the lessons learned from
a failure to develop a sales force. We conclude by presenting two scenario - based exercises
crafted to impart knowledge about designing and evaluating learning solutions.
ANALYZE TRAINING NEEDS
Training needs analysis can be the most important phase of training design because its
success depends on an intensive collaborative partnership between key stakeholders. The
charge of this partnership is to clarify the purposes of training, illuminate the organiz-
ational context, define effective performance and its drivers, and begin to cultivate a cli-
mate of learning. Essential activities conducted during the needs analysis phase include:
(a) conducting training due diligence, (b) defining performance functions and processes,
(c) defining affective and cognitive states, (d) defining an attribute model, and (e) delineat-
ing learning objectives. When executed with care, these activities can help ensure remaining
phases yield a meaningful learning solution.
Conduct due diligence
Training methods and techniques are not interchangeable or universally applicable, as
evidenced by recent meta - analytic findings (Klein, Stagl, Salas, Burke, DiazGranados,
Goodwin, and Halpin, 2007 ). For example, the same learning solution may be differ-
entially effective if it is implemented to address short - , mid - and/or long - term business
objectives. Hence, effective instruction in one setting may prove counterproductive else-
where. This is why it is critical to describe the specific challenges and opportunities train-
ing will address; and thereby defi ning what, and for whom, benefi ts will accrue.
Due diligence is a process for clarifying and quantifying the expected benefi ts from
training for individuals, teams, and higher- level units (division, organization, society). The
purpose of the process is to gather the information required to have an objective and dis-
passionate dialog about whether or when a particular solution should be institutionalized.
And the conversation must encompass more than just performance, productivity, and
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61
Table 4.1 Summary of training phases, principles and guidelines
Training phase
Guiding principle
Training guidelines
Analyze training needs Conduct due diligence Describe an organization’s mission, strategy, structure, context,
and desired outcomes
Articulate the benefi ts for individuals, teams, and higher-level
units (division, organization, society)
Link solutions to specifi c organizational outcomes (performance,
effectiveness, profi tability)
Consider the impact on organizational performance-related factors
(satisfaction, reputation, social capital)
Frame cross-level effects of contextual factors on motivation,
learning, and transfer
Specify how individual results emerge to impact unit- or organization-
level outcomes (vertical transfer)
Conduct a stakeholder analysis to identify and understand parties
advocating for and against training
Estimate the expected net present value of proposed training
solutions
Defi ne performance Leverage established theories of performance and taxonomies of
requirements processes to guide criteria specifi cation
Disaggregate dependent variables to illuminate the specifi c aspects
of performance targeted by training
Use task inventories, cognitive task analysis, and critical incident
interviews to nuance key factors
Conduct probed protocol analysis to elicit the stimuli, goals, and
actions of experts in natural situations
(continued)
DESIGN TRAINING SYSTEMATICALLY AND FOLLOW THE SCIENCE OF TRAINING
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62
Table 4.1 (continued )
Training phase Guiding principle Training guidelines
Map the trajectory of change from novice to expert performance
Describe the relative importance of taskwork and teamwork pro-
cesses during performance episodes
Defi ne cognitive and Frame individual-level cognitive (mental models, situation aware-
affective states ness) and affective (self-effi cacy) states
Describe the types of mental models (equipment, task, team) tar-
geted for development
Use event-based knowledge-elicitation techniques with subject
matter experts to describe shared states
Model the compositional or compilational emergence of cognitive
and affective states
Determine the relative importance of sharedness and accuracy of
cognitive and affective states
Defi ne KSA attributes Specify the direct determinants of the processes and emergent
states comprising effective performance
Leverage knowledge and skill inventories, skill repositories, and
performance records
Describe the declarative, procedural, and strategic knowledge
applied to enact performance processes
Describe the attitudes that can be changed as a result of the learn-
ing process
Identify short-, mid-, and long-term competency requirements
given alternative performance requirements
E DUARDO S ALAS AND K EVIN C. STAGL
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63
Delineate learning
objectives
Develop training Design learning
content architecture
Forge instructional
experiences
Translate training needs into training objectives, learning objec-
tives, and enabling objectives
Contextualize task statements by describing appropriate perform-
ance standards
Delineate behavior-, cognitive-, and affective-based learning
objectives
Ensure learning objectives are clear, concise, and link to measur-
able learning outcomes
Develop an intelligent scenario management system that allows
instructors and users to author content
Design a dashboard interface that can be used to control training
content, sequence, and pace
Program systems to provide tailored training features based on
aptitude–treatment interactions
Design the capacity to manipulate action tempo and compress the
arrival time of events
Design the capacity to vary the predictability and diffi culty of
contexts, tasks, events, and situations
Program intelligent tutors to dynamically monitor, assess, diag-
nose, intervene, and remediate performance
Create the capacity to compile performance records and for an
on-demand lesson learned repository
Develop an instructional management plan, instructor guides, and
scripts
Map the branching paths learners can take and forecast where
trainees are likely to encounter diffi culties
Construct a chronological timeline of training events
Craft instructional content that has psychological fi delity as well
as physical fi delity
(continued)
DESIGN TRAINING SYSTEMATICALLY AND FOLLOW THE SCIENCE OF TRAINING
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64
Table 4.1 (continued )
Training phase Guiding principle Training guidelines
Include opportunities for trainees to discover knowledge and
rel ationships for themselves
Develop lectures, exercises, games, reading lists, and illustrative
case studies
Leverage role plays, motion pictures, closed-circuit television, and
interactive multimedia to display models
Increase stimulus variability by manipulating the character and
competence of models
Ramp practice diffi culty by including multiple levels and increas-
ingly incongruent environments
Incorporate routine obstacles, emergency situations, and crisis
events trainees must navigate
Develop assessment tools Develop tools to assess multiple dimensions of trainee learning
and performance
Construct multiple-choice and situational judgment tests to assess
knowledge and skill
Develop concept maps, card sorts, and pair-wise comparison rat-
ings to illuminate knowledge structures
Assess the fragmentation, structure, and accessibility of knowledge
chunks
Triangulate measurement by leveraging multiple elicitation and
representation techniques
Create tools to dynamically capture trainee key strokes, communi-
cation, and perceptual movements
E DUARDO S ALAS AND K EVIN C. STAGL
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65 DESIGN TRAINING SYSTEMATICALLY AND FOLLOW THE SCIENCE OF TRAINING
Implement training Set the stage for learning Provide trainers with frame of reference and rater error training
if ratings are used to evaluate trainees
Measure and take steps to increase motivation to learn
Prepare trainees to engage in meta-cognitive and self-regulatory
processes
Provide advanced organizers of learning points
Prompt trainees to explore, experiment, and actively construct
explanations in their training environment
Frame errors as a natural part of training that contribute to
learning
Ask trainees to refl ect over the informative aspects of errors when
they occur
Deliver blended solution Use information presentation techniques such as reading assign-
ments, lectures, and discussions
Prompt learners to generate knowledge and skills that are targeted
for acquisition
Require trainees to integrate and associate various facts and
actions into coherent mental models
Pose diffi cult and structured refl ection questions after case studies
Ask trainees to integrate information and discern common themes
provided in contrasting cases
Explore the lessons learned from case studies of effective and inef-
fective performance
Guide trainees through deliberate practice by asking them to
repeat similar tasks with gradual modifi cations
Encourage trainees to persist in practice to the point of
overlearning/automaticity
(continued)
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66
Table 4.1 (continued)
Training phase Guiding principle Training guidelines
Support transfer and Conduct training debriefi ngs organized around key events and
maintenance learning objectives
Guide self-correction by keeping the debriefi ng discussion focused
and modeling effective feedback skills
Reserve instructor input for times when trainees cannot generate
input or when clarifi cations are required
Identify lessons learned and areas for continued improvement to
guide self-development efforts
Prompt trainees to set proximal and distal goals for applying new
capabilities
Identify and implement solutions to accelerate the cycle time
required to realize training benefi ts
Schedule shorter booster sessions after the main training initiative
is complete
Evaluate training Execute evaluation plan Determine the purposes, needs, and sophistication of the con-
sumers of training evaluation fi ndings
Identify an appropriate experimental, quasi-experimental, or
passive-observational training design
Consider alternatives when rigorous experimental designs are not
feasible in a given setting
Review controls for factors that affected the inferences drawn
from training evaluation
Compile subjective evaluations and objective indices of multiple
training criteria
E DUARDO S ALAS AND K EVIN C. STAGL
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67 DESIGN TRAINING SYSTEMATICALLY AND FOLLOW THE SCIENCE OF TRAINING
Ensure consistency between the level of focal variables, contextual
factors, design, aggregation, and analysis
Consider the relative effi cacy of various approaches to measuring
longitudinal change
Gauge trainee learning Measure the extent trainees’ expectations were fulfi lled as proximal
indicators of reactions and learning
Differentiate between affective and utility reactions
Assess learning in terms of affective, behavioral, and cognitive
outcomes
Measure short-term retention immediately after training and
long-term retention
Gauge transfer by examining generalization to the job context
and maintenance of learning over time
Plot a maintenance curve and determine reasons for any decrements
in maintenance over time
Consider the interactions of work characteristics and time on the
application of skills in the workplace
Gauge team learning Model unit-level outcomes as the mean of individual-level change
when vertical transfer is compositional
Evaluate both individual-level and unit-level outcomes when vertical
transfer is compilation based
Use longitudinal designs when evaluating vertical transfer based
on compilation emergence models
Use techniques applicable to analyzing non-linear confi gural rela-
tionships when emergence is compilational
(continued)
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68
Table 4.1 (continued )
Training phase Guiding principle Training guidelines
Gauge organizational Estimate the cross-level relationships of improved individual
impact performance on organizational performance
Determine whether the costs of training were recouped
Estimate the return on investment from training
Estimate the utility or economic impact of a training solution over
time
Disseminate training
results Provide trainees with a copy of training evaluation reports
Ensure the information collected from the transfer context is avail-
able to other designated parties
Ensure designated parties have a clear understanding of the impli-
cations of evaluation fi ndings
Implement solution process changes suggested by the fi ndings of
formative evaluations
Implement changes in the talent management system suggested
by summative evaluations
E DUARDO S ALAS AND K EVIN C. STAGL
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69 DESIGN TRAINING SYSTEMATICALLY AND FOLLOW THE SCIENCE OF TRAINING
profitability concerns, as training can also be a powerful lever for enhancing performance -
related factors such as employee satisfaction, team cohesion, social capital, and organiz-
ational reputation.
A core component of the due diligence process is a pretraining transfer analysis. The
analysis helps describe the dimensions targeted for horizontal transfer, the emergent pro-
cesses of vertical transfer, and the contextual factors that may promote or impinge on
the transfer process. For example, the number, scope, and nature of the salient nesting
arrangements in an organization must be mapped to determine their potential effects on
nested variables (Mathieu, Maynard, Taylor, Gilson, and Ruddy, 2007 ). Designers should
be careful to distinguish between objective situational characteristics and social –
psychological perceptions of organizational factors as well as evaluate the embeddedness
or bond strength of key dimensions (Kozlowski and Salas, 1997 ).
Organizational leaders can actively contribute to a climate for learning, or passively
inhibit the replication of learned behaviors in the workplace. A thorough stakeholder
analysis can identify champions of training and provides a forum for airing concerns. This
is important because training, like all initiatives, involves the allocation of limited fi nancial
resources which some may feel are better routed to the production of goods or services,
marketing campaigns, infrastructure improvements, and/or technology upgrades. Yet, in
order for training to be successful there must be both sufficient financial and personal
support for it. Hence, parties on both sides of the isle are best identifi ed and, when appro-
priate, persuaded in advance. Favorable projections of the net present value of training
relative to other capital investments can be particularly persuasive evidence when esti-
mates are based on realistic and conservative inputs.
Define performance requirements
A second training needs analysis activity involves defi ning performance requirements.
Established theories of performance, and taxonomies of performance processes, should
be leveraged to precisely define the nature of performance (see Campbell and Kuncel,
2002 ; Marks, Mathieu, and Zaccaro, 2001 ; Salas, Stagl, Burke, and Goodwin, 2007 ).
This involves describing, disaggregating, and contextualizing the taskwork and teamwork
processes that are critical to overall performance. Behavioral - and cognitive - oriented task
inventories, critical incident interviews, focus groups, and card sorts can each help nuance
key factors. Protocol analysis whereby experts verbalize their thoughts during problem
solving is also an especially useful technique for eliciting decision - making processes in
natural settings (Ericsson, in press). Training designers should also take steps to model and
minimize the systematic and random sources of error inherent to job analysis data.
Once key performance dimensions are defined they should be bracketed by mapping
their antecedents and moderators within and outside the focal level of interest (Hackman,
1999 ). For example, the effectiveness of team coordination can be predicated upon moti-
vated members at an individual level and investments in information technologies at an
organizational level. The relative importance of these factors to alternative short - , mid - , and
long - term business scenarios should also be illuminated so that specific criteria can be bet-
ter targeted for improvement. It is also essential to map the projected trajectory of trainee
change in these factors over time. Describing the transitional process from novice to expert
provides insight into how training content should be developed, delivered, and evaluated.
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70 E DUARDO S ALAS AND K EVIN C. STAGL
Define cognitive and affective states
Taskwork and teamwork processes are not executed in isolation. As employees enact per-
formance processes (e.g. situation assessment) they dynamically draw upon and revise
their cognitive (e.g. mental models, situation awareness) and affective (e.g. self - effi cacy,
motivation) states. Designers charged with creating training solutions must describe and
frame these states, specify why and how they enable effective performance, and forge
instructional experiences that appropriately target them for development. For example,
both the content (e.g. declarative knowledge, procedural knowledge) and types of men-
tal models (e.g. situation, task, equipment) should be delineated. Subject matter experts
asked to complete an event - based knowledge - elicitation process can provide information
that helps identify the states that should be targeted for development by training (Fowlkes,
Salas, Baker, Cannon - Bowers, and Stout, 2000 ).
Once essential states are identified, it is important to determine if, and the extent to
which, cognition and affect must be shared or be complementary to enable effective per-
formance in the workplace. This is a particularly acute concern in team training settings
because scholars often invoke shared mental models and shared affect to explain how
collectives execute both routine and adaptive team performance (Burke, Stagl, Salas,
Pierce, and Kendall, 2006 ). Moreover, cultivating shared affect via training simulations
can help prepare teams to navigate even unprecedented challenges (see Klein, Stagl,
Salas, Parker, and Van Eynde, 2007 ).
The unfolding compositional or compilational process via which the content and struc-
ture of cognition and affect emerge to the unit level should be clearly specified because it
provides insight about the kinds of instructional methods, features, and tools required to
facilitate the development of team states. For example, recent meta - analytic evidence sug-
gests that cross - training teams is particularly well suited for imparting shared taskwork and
teamwork mental models by providing members with knowledge about their teammates ’
tasks, roles, and responsibilities (Stagl, Klein, Rosopa, DiazGranados, Salas, and Burke,
unpublished manuscript).
Define KSA attributes
In addition to framing the core processes and cognitive and affective states that collectively
com prise affective performance, training practitioners must also define an attribute model.
Attri bute models specify the direct determinants of performance such as knowledge, skills, and
attitudes (KSAs). Training designers should leverage structured attribute inventories, skill
repositories, and even performance records to shed light on the KSAs that should be targeted
for development by a training solution. For example, the declarative (i.e. what), procedural
(i.e. how), and strategic (i.e. why) knowledge required to effectively execute performance pro-
cesses must be defined. Strategic knowledge is especially important because it allows trainees
to understand why and when to apply declarative knowledge (Kozlowski, Gully, Brown,
Salas, Smith, and Nason, 2001 ). This example illustrates that KSAs must first be identifi ed
and then ordered in a sequence from those that are more fundamental to those that are more
complex in order to maximize the benefit of sequenced learning opportunities.
Training designers should be cognizant that not all of the myriad of characteristics and
capabilities can be targeted for development via a single training solution; and that not
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71 DESIGN TRAINING SYSTEMATICALLY AND FOLLOW THE SCIENCE OF TRAINING
all KSAs are best developed via training methods (Campbell and Kuncel, 2002 ). Rather,
the needs analysis process should allow for the identification of those KSAs that are most
essential to performance at multiple levels with greater emphasis given to dimensions that
are most amenable to change via an instructional experience as it is projected to be intro-
duced in a particular setting. The opinions and insights of subject matter experts and past
trainees can help practitioners hone in on key attributes. Multiple perspectives should also
be leveraged when defining which KSAs are most relevant to organizational success given
alternative business models.
Delineate learning objectives
The final step in analyzing training needs involves delineating learning objectives. The
information gathered from the prior steps of the need analysis process must be translated
into training objectives, learning objectives, and enabling objectives. In practice, task state-
ments are often transformed into learning objectives by supplementing them with con-
textual information and performance standards. It is important to remember, however,
that designers should not force learning objectives into behaviorally based statements of
employee actions; as cognitive and affective learning objectives are equally important to
fostering effective performance (Kraiger, 2002 ). Suitable learning objectives are clear, con-
cise, and measurable. To the extent that these three criteria are met, instructional content
will be more targeted and ultimately more useful.
DEVELOP TRAINING CONTENT
The second phase of designing a training solution involves a series of activities undertaken
in support of developing training content, including: (a) designing a learning architecture,
(b) creating instructional experiences, and (c) developing assessment tools. For the pur-
poses of the present discussion it is assumed training is not confined to classroom walls,
in - house or otherwise, but rather is delivered via a blended learning solution that encom-
passes multiple mediums and locations. While blended learning solutions typically include
a dedicated block of classroom time, they also include other instructional mediums
such as desktop computer- or web - based learning modules and sometimes even full -
task simulators. Interestingly, the findings of a recent survey of 400 human resource
executives across 40 countries suggest blended learning solutions are considered the most
effective approach for meeting training needs (IBM, 2008 ). The specific content of a given
training solution will vary widely from setting to setting given organizational objectives,
financial constraints, and needs.
Design learning architecture
A learning architecture is comprised of several integrated subsystems which collectively
provide the capability to plan, select, author, sequence, push, evaluate, store and mine learn-
ing content, techniques, assessment algorithms, KSA profi les, and performance records.
An intelligent scenario management system can be programmed to provide instructional
designers, instructors, and trainees with the access, tools, and guidance required to create
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72 E DUARDO S ALAS AND K EVIN C. STAGL
and change content to reflect operational challenges (Zachary, Bilazarian, Burns, and Cannon -
Bowers, 1997 ).
An intuitive dashboard interface (a graphical user interface with dropdown menus) with
simple navigation can be designed to control the content, sequence, and pace of training.
For example, employees with limited time for training may occasionally need access to
quick refresher tutorials rather than more intensive mastery learning driven lessons. This
example hints at what has too long been the holy grail of learning architectures (namely,
computer adaptive training). The computing power to fulfill this quest is both readily avai lable
and increasingly affordable; so learning architectures should be designed to account for
learner differences in goals, competencies, and capabilities and adjust accordingly.
With sufficient development time and psychometric expertise, architectures can be pro-
grammed to capitalize on the exponential gains in learning that can result from accounting
for aptitude – treatment interactions (Cronbach and Snow, 1977 ). Embedded tools can assess
a trainee ’s expertise, abilities, self - effi cacy, and goal orientation and tailor training structure,
content, feedback, and guidance to maximize the benefits accrued by learners. While the
costs of such an approach are front loaded, often requiring substantially more content to
be generated, scaled and sequenced, the horizontal and vertical rewards of computer
adaptive training will ultimately deliver the knockout blow to static, out - of - the - box solutions.
Learning architectures can also incorporate additional useful features like text - to - speech
conversion, speech recognition, information visualization, perceptual contrasts, and play-
back. A system that is comprised of several subsystems can highlight important events
and cues (Stout, Salas, and Fowlkes, 1997 ) and pose questions and hints to learners
(Lajoie, in press), thereby prompting self - regulatory activities (Bell and Kozlowski, 2002 ).
The encoding and storage capabilities of some architectures can also dynamically capture
instructor ratings, comments, and debriefing markers (Smith - Jentsch, Zeisig, Acton, and
McPherson, 1998 ). Systems can also capture and upload information on an intranet or
the internet so learners can leverage on - demand tutors, chat rooms, forums, and lessons
learned repositories.
Forge instructional experiences
The most important step of developing training content involves forging and blending
instructional experiences. The process includes outlining an instructional management
plan, instructor guides, and when necessary detailed scripts. This stage is another impor-
tant juncture at which instructional designers can lean on and learn from present or past
trainees to help illuminate the multiple branching paths trainees may take when pursu-
ing the attainment of learning objectives (Lajoie, in press). Mapping the potential paths,
including some of those less traveled by, is essential to accurately forecast when trainees
are likely to falter, crafting meaningful learning experiences and tailoring appropriate
guidance.
When a myriad of branching paths preclude precisely defining a single overarch-
ing chronology of experiences, the most effective alternative event timelines should be
mapped to help inform scenario sequencing, assessment, and feedback. Content in even
high learner control environments must be sequenced to some extent because the deve-
lopment of knowledge structures and complex performance processes are contingent on
the prior acquisition and chunking of more fundamental knowledge and skills (Anderson,
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73 DESIGN TRAINING SYSTEMATICALLY AND FOLLOW THE SCIENCE OF TRAINING
1993 ). This means it is essential to impart the capabilities underlying component tasks
prior to developing KSAs underpinning linking tasks (Goldstein and Ford, 2002 ). For
example, materials presenting general rules and principles should precede those highlight-
ing the structural, functional, and physical relationships among systems. Scenarios, and
the experiences they impart, can be sequenced to reflect increasingly complex operational
realities (Gagn é , Briggs, and Wager, 1988 ).
When instructional content is integrated and orchestrated it serves to foster holistic,
meaningful experiences for trainees. For example, contextually grounded scenarios help
trainees better understand their learning experience by replicating a familiar workplace.
Unfortunately, stakeholders are too often preoccupied with representing, to the great-
est degree possible, the operational context via high fidelity technologies. This can be a
mistake because physical fidelity is often a secondary concern to the psychological fi del-
ity induced by instructional experiences. The primacy of psychological fidelity is seen in
the effectiveness with which computer- based training solutions can supplement, and for
some soldiers substitute, for the large - scale military exercises conducted at the US Army’s
National Training Center (Chatham, in press, A).
Forging effective instructional experiences requires a systematic consideration of the
methods via which information is delivered in training settings. Three of the most common
means of packaging training content are via information presentation, demonstration, and
practice. For example, lectures, exercises, case studies, and games can be used to present
information to trainees. In terms of demonstrating or modeling key skills, role - plays,
motion pictures, closed - circuit television, and interactive multimedia displays can be used
in conjunction or separately. Trainee attendance to models can be increased by matching
models to the demographic characteristics of trainees and by varying model competence.
In terms of scheduling opportunities for trainees to practice, initially alloting time for
massed practice followed by a variable practice schedule can be effective for developing the
capabilities required to perform complex tasks. It has also been suggested that interleav-
ing, or providing information, demonstration, and practice across multiple mediums, on a
single or small cluster of similar tasks, is more effective than blocking practice on separate
tasks (Bjork, in press). Instructional designers should also ensure that there is suffi cient spac-
ing between separate training modules and between lessons and learning assessment.
In terms of the types of practice scenarios that instructional developers should craft,
novice learners should be exposed to routine obstacles that must be navigated. As trainees
move along the trajectory of development, practice difficulty can be increased to simu-
late complex challenges in increasingly incongruent environments. This requires training
designers to systematically specify the dimensions along which training scenarios will
become more complex and fluid. Finally, emergency situations and crisis events should
be designed so that trainees are forced to persevere through adversity as their expertise
accrues (McKinney and Davis, 2003 ).
Develop assessment tools
Once meaningful instructional experiences have been forged, assessment tools and tech-
niques must be developed to operationalize key learning constructs. A comprehensive
treatment of the application of psychometric theory to creating assessment tools and
assessing the process and outcomes of learning is beyond the scope of the present
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74 E DUARDO S ALAS AND K EVIN C. STAGL
discussion. Rather, only broad prescriptions are presented. Training designers are strongly
encouraged to seek the consultation of subject matter experts when designing assessment
tools, as poorly designed or improperly timed metrics can make even good training appear
bad and bad training turn ugly.
The most straightforward guidance is to develop standardized measures of unitary
constructs; assess multiple learning outcomes and performance processes; and triangulate
the measurement of outcomes via multiple assessment methods (Nunnally and Bernstein,
1994). Following these truisms helps yield the tools required to understand the effects
of training. For instance, the findings of an evaluation study may suggest that trainees
acquired a great deal of factual information (namely, declarative knowledge) but have no
concept of why and when to apply specific facts in context (namely, strategic knowledge).
Without reliable measures of different knowledge types, stakeholders evaluating the train-
ing solution would be left pondering why transfer failed.
Fortunately, comprehensive guidance for designing and applying assessment tools in
training initiatives is available to interested readers. For example, recent reviews of assessing
learning outcomes have discussed the use of concept maps, card sorts, and pair- wise com-
parisons for scaling trainee ’s knowledge structures (Stagl, Salas, and Day, 2007 ). The benefi ts
of situational judgment tests for training needs assessment, content delivery, and evaluation
have also been discussed at length elsewhere (Fritzsche, Stagl, Salas, and Burke, 2006 ).
IMPLEMENT TRAINING
Implementation is a key phase in the training process, in part because it is tightly bound
to the organizational system in which training is conducted. More specifi cally, there are
three major activities associated with training implementation, including: (a) setting the
stage for learning, (b) delivering a blended learning solution, and (c) supporting transfer
and maintenance. The former and latter activities involve actions taken to foster a climate
for learning.
Set the stage for learning
Setting the stage for learning begins by ensuring trainers are properly prepared to facilitate
the delivery of instruction, recognize and assess learning, and reinforce effective perform-
ance when it occurs. There are several approaches to preparing trainers to perform their
duties such as rater error training, frame of reference training, and the mental simulation
of instructor activities. For example, frame of reference training increases the awareness
and skill of trainers to indentify and assess key competency and performance dimensions
when they are displayed in training.
The second step in setting the stage for learning involves preparing the trainee for the
acquisition of KSAs. This includes measuring and increasing a trainee ’s motivation to learn,
self - efficacy, and self - regulatory skills (Colquitt, LePine, and Noe, 2000 ). It is also important
to de - emphasize pre - existing power differences, engage less verbal learners, and display an
individualized interest in the development of each employee when training in group settings.
Once trainers and trainees are adequately prepared to engage in learning, the purpose
and objectives of training must be stated and explained. This is an opportunity to frame
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75 DESIGN TRAINING SYSTEMATICALLY AND FOLLOW THE SCIENCE OF TRAINING
training as both a privilege and a necessity by describing why it is instrumental to securing
valued outcomes for individuals and their employers. It is also a time to provide a realis-
tic preview of training and advanced organizers of the instructional experience can help
guide this conversation.
The next step in setting the stage for learning involves stating learning and perform-
ance standards so that trainees have appropriate benchmarks against which to gauge their
development. In addition to setting standards, trainers should discuss how trainees should
pursue goals. For example, performance goals are often sufficient when training is con-
cerned with skill automaticity for simple tasks; however, mastery goals, which emphasize
learning rather than the demonstration of ability, are typically more useful for facilitating
proficiency in complex task domains (see Chapter 9 , this volume). Trainees should also be
engaged in helping to set their own proximal and distal training goals.
A final step involves providing trainees with learning tips. For example, attentional
advice, strategies and preparatory information about stressors can alert trainees to impor-
tant aspects of instruction. Learners should be encouraged to explore, experiment, and
actively construct meaning from training events. For example, errors should be framed
as opportunities to reflect and delineate lessons that can be transferred to the workplace
(Keith and Freese, 2008 ). Sometimes, trainees may require instruction on how to learn
from their failures (Argyris, 1992 ) .
Deliver the blended learning solution
The second stage in implementing training involves delivering the blended learning
solution. There are three mechanisms for delivering content including information pres-
entation, modeling, and practice. Information can be presented via the use of lectures,
reading assignments, case studies, and open discussions. The specific content of what is
discussed is dictated by the particular KSAs targeted for development but should also
include descriptions of effective and ineffective performance, common workplace errors,
and tactics for meeting business challenges.
Trainees should be encouraged to actively construct, integrate, and associate various
facts rather than be treated as passive recipients of instructional content (Schwartz and
Bransford, 1998 ). For example, couching lessons in contrasting cases comprised of alterna-
tive, but equally compelling, explanations for some event or dilemma can be a powerful
approach for motivating the active construction and acquisition of knowledge and skill
(Fritzsche, Stagl, Burke, and Salas, in press). Similarly, perceptual contrasts, or alternative
pictorial depictions, can be useful for helping trainees notice the subtle features of infor-
mation that can be visualized (Bransford, Franks, Vye, and Sherwood, 1989 ).
Prior to practice, trainees should be asked to engage in symbolic rehearsals or mental
simulations of the processes they intend to enact during training. During practice, trainees
should be given ample opportunity to repeatedly engage in the cognitive and behavioral
actions targeted for development to the point of overlearning. It is important to note, how-
ever, that repeated practice is often not suffi cient to develop learning outcomes and may even
be counterproductive to skill generalization. Rather, trainers should guide trainees through
deliberate practice by requiring repetitions on gradually modified tasks (Ericsson, in press).
For example, difficulties, obstacles, and equipment malfunctions can be gradually introduced
to ramp training complexity as learners develop competence in navigating routine challenges.
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76 E DUARDO S ALAS AND K EVIN C. STAGL
When training content is delivered, instructors, an intelligent learning architecture, or
a combination of the two, must assess the progress of learners and deliver timely, accu-
rate, and actionable feedback. For example, evaluative and interpretative feedback can be
used to provide trainees with adaptive guidance (Bell and Kozlowski, 2002 ). While nov-
ice learners may need more immediate feedback, over time diagnostic information should
be faded and delivered more intermittently to gradually remove the scaffolding inherent
to training solutions.
Support transfer and maintenance
Training is often concluded when practice and assessment are complete. This is unfortu-
nate because the post - practice stage provides a window of opportunity to enhance learn-
ing transfer and maintenance. For example, after action reviews both debrief and educate.
Trainers should empower trainees to drive this dialog by soliciting and reinforcing com-
ments while withholding input for clarifi cations (Tannenbaum, Smith - Jentsch, and Behson,
1998 ). Asking trainees to generate explanations for their actions during training is critical
to the process.
Once the debriefing session is complete, trainers should offer final guidance to learners.
Trainees, in conjunction with their managers and leaders, should be prompted to
set proximal and distal goals for applying newly acquired capabilities in the workplace
(Taylor, Russ - Eft, and Chan, 2005 ). It is also important to advise trainees to refl ect over
their training experiences and to continually refresh their learning to avoid skill decay. For
example, peer- to - peer rehearsals, communities of practice, and online discussion forums
can each contribute to facilitating the long - run maintenance of learning.
The fi nal step of training implementation involves intervening in the workplace to help
ensure transfer. Engaging a trainee ’s managers and supervisors to encourage, recognize,
and reward the display of newly acquired KSAs can help foster a climate for learning.
Steps should also be taken to minimize the delay between training and operational use of
new capabilities.
EVALUAT E TRAINING
The final phase in designing systematic training involves evaluating whether training was
effective, and more importantly, why it was effective (or ineffective) so that required improve-
ments can be made. Unfortunately, many organizations do not evaluate training effec tiveness
because evaluation can be costly and resource intensive. It often requires specialized
expertise and a team of people who can collect and interpret performance data. However,
organizations often fail to consider that ineffective training can be far more costly in
the long - term, in terms of poor performance, errors, and missed opportunities, than an
investment in training evaluation. Therefore, it is imperative that organizations assess the
effectiveness of training and use the information gathered as a means to improve training
design.
The first step in evaluating training involves determining the purpose of evaluation as
well as the sophistication of the consumers of evaluation study findings (Kraiger, 2002 ).
Many different variables can be measured during training evaluation including affective
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77 DESIGN TRAINING SYSTEMATICALLY AND FOLLOW THE SCIENCE OF TRAINING
and utility reactions, expectation fulfillment, the ABCs of learning, and performance on a
host of teamwork and taskwork processes, just to name a few. For example, we mentioned
earlier in our discussion the importance of assessing the type, amount, and structure of
newly acquired knowledge. Moreover, the proceduralization, compilation, and automatic-
ity of new skills can also be gauged.
It is also important to think through the likely results from training evaluation studies.
For example, in some cases pretraining levels of performance do not increase as a result of
training, as assessed during or immediately after practice, and yet workplace performance
improves substantially during an entire fiscal year. This result can occur when errors and
difficulties are systematically integrated into a blended learning solution (Bjork, in press).
Of course, without an infusion of obstacles, trainers can face the obverse problem of
maximizing change on the ABCs of learning without fostering subsequent performance
transfer, maintenance, and generalization in the workplace. This scenario demonstrates
the importance of having quality metrics but also speaks to the criticality of knowing why
and when assessment tools should be applied.
A variety of rigorous experimental designs are available to evaluate training and the
strengths and weaknesses of a particular approach should be identified and addressed
before it is used to evaluate training (Shadish, Cook, and Campbell, 2002 ). There are also
a number of non - experimental designs that are also very useful for evaluation, given that
situational constraints preclude the use of formal experimentation (Sackett and Mullen,
1993 ). One of the key questions to deciding between evaluation designs is whether the
purpose of training is to facilitate change or to help trainees achieve some standard of
performance. Comprehensive guidance on analytic techniques for conceptualizing and
gauging change is available in the former case (Day and Lance, 2004 ). In the latter case,
less rigorous research designs can yield useful information.
In order for the findings of evaluation studies to be meaningful there must be con-
sistency between the level of the focal variables and contextual factors, research design,
aggregation rules, analysis, and result interpretation (Kozlowski et al., 2000 ). Consistency
is essential to meaningfully estimate the impact of training on organizational perform-
ance as well as to yield useful inputs for return on investment, cost – benefi t and net present
value calculations.
CASE EXAMPLES
A success: the aviation experience
Teamwork improves performance in some jobs; in others it is imperative. For example,
teamwork in the cockpit is essential – lives depend on it. We know that 60 – 80% of the acci-
dents or mishaps in aviation are due to human error and a large percentage of those are
caused by coordination and other teamwork problems in the cockpit.
Research on team training has developed many instructional methods and techniques
to enhance teamwork in complex environments such as the cockpit. These approaches are
pervasive in the aviation industry. In fact, both the military aviation community and the
commercial airlines implement systematic team training (Weiner, Kanki, and Helmreich,
1993 ). The Navy has designed and delivered team training for its aviation platforms for
many years. For example, engagement simulations, which provided a forum and format
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78 E DUARDO S ALAS AND K EVIN C. STAGL
for group experiential learning, helped the US Navy increase its superiority in air- to - air
combat by a factor of 12 in one year (Chatham, in press, B). This training continues to be
refined and scaled to reach more people more often via personal computer- based fl ight
simulators (Brannick, Prince, and Salas, 2005 ).
Training scientists and learning specialists, in partnership with subject matter experts,
developed an approach that systematically helps instructional developers design and
deliver Crew Resource Management (CRM) training in the Navy (Salas, Prince, Bowers,
Stout, Oser, and Cannon - Bowers, 1999 ). This method illustrates how to apply the four
phases outlined in this chapter. It begins with an identification of operational and mission
requirements and the required competencies and performance processes (i.e. needs analy-
sis). Extensive interviews and observations were conducted in order to ensure the required
KSAs for coordination were identified. The literature was reviewed and a theory - based
framework developed.
In parallel to this process, the scientists, sponsors, users, and industry representatives
met on an ongoing basis to discuss organizational procedures and policies that needed
to be in place as the methodology evolved. In the end, this proved to be a very valuable
dialog – it prepared the Navy for the training. Specifically, it created a learning climate –
before the training was implemented, during and after. Once training objectives were
derived and validated by SMEs, the methodology called for designing and creating
opportunities for practice and feedback, developing measurement tools for feedback, and
implementing the training. The methodology ended with suggestions for ensuring that a
multi - component evaluation protocol is built into training.
This methodology has been translated into a detailed set of specifications. These are a
set of step - by- step instructions that can be used by instructional designers to develop cur-
riculum and supporting materials. The evaluation of communities following this approach
suggest crews react better to the instruction, learn more about teamwork, and exhibit
more teamwork behaviors in the cockpit as a result of the training (Salas, Fowlkes, Stout,
Milanovich, and Prince, 1999 ).
In sum, this methodology has been implemented and tested in several communities –
and it works. It works because the approach uncovers the needed KSAs and performance
processes, prepares the organization for the training, relies on theories of learning, and
applies sound instructional principles to the design of team training. It works because the
training seeks to diagnose and remedy - specifi c deficiencies. It works because the imple-
mentation process sets the right climate for learning and transfer and evaluates its impact.
It works because the methodology guides the instructional developer through a systematic
process incorporating all the phases outlined here, and utilizes the best information that
the science of training can offer.
A failure: training the sales force
Sales at a large telecommunications company were down for the third quarter. Manage-
ment reviewed several strategies to improve sales and concluded that one solution would
be to improve training for the large, dispersed sales force. For the sake of expediency, the
training department began using a needs analysis they conducted several years before as
a basis to develop enhanced training. Their plan was first to update the original needs
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79 DESIGN TRAINING SYSTEMATICALLY AND FOLLOW THE SCIENCE OF TRAINING
analysis and then to develop new training strategies on the basis of what they found.
They also began investigating new training technologies as a possible means to reduce train-
ing delivery costs. However, management was so intent on doing something quickly that the
training department was ultimately pressured into purchasing a generic, off - the - shelf
training package by a local vendor. One of the features of the package that appealed to
management was that the course could be delivered over the web, saving the time and
expense of having the sales force travel to the main office to receive the training. Hence,
even though the package was costly to purchase, the company believed that it was a
bargain compared to the expense of developing a new package in - house and delivering
it in person to the sales force.
Six months after the training had been delivered, sales were still declining. Management
turned to the training department for answers. Because no measures of training perform-
ance had been designed, the training department had little information upon which to
base its diagnosis. For lack of a better idea, members of the training department began
questioning the sales force to see if they could determine why the training was not work-
ing. Among other things, the sales people reported that the training was slow and boring,
and that it did not teach them any new sales techniques. They also complained that, with-
out an instructor, it was impossible to get clarification on the things they did not under-
stand. Moreover, they reported that they believed that sales were off not because they
needed training in basic sales techniques, but because so many new products were being
introduced that they could not keep up. In fact, several of the sales people requested
meetings with design engineers just so they could get updated product information. The
training department took these findings back to management and requested that they be
allowed to design a new training package, beginning with an updated needs analysis to
determine the real training defi ciencies.
So how could this company have avoided this costly mistake? Our contention is, had
they engaged in a systematic training design and delivery process, they would have pro-
vided effective training and not invested in a useless product. For example, a careful needs
analysis would have revealed specific performance deficiencies. In addition, a better assess-
ment of the training delivery – especially as it related to trainee motivation – would have
indicated that the web - based course may not have been the best choice. Unfortunately,
cases like this occur all too frequently, but can easily be avoided if a systematic process for
training design and delivery is followed.
CONCLUSION
As recently as the 1990s, the transformative power of training was not appreciat-
ed in some circles, as typified by Jack Welch ’s statement “ We want only A players.
Don’t spend time trying to get C ’s to be B ’s. Move them out early ” (Slater, 1998 ,
p. 157). Today, the mandate to gain competitive advantage via the people who make
the place has never been stronger; and even Wall Street wonders like GE are aggres-
sively developing talent. In fact, 75% of 400 HR executives across 40 countries view
leader development as mission critical (IBM, 2008 ).
There was a time from World War II until the 1960s when the training litera-
ture was voluminous but largely “ . . . nonempirical, nontheoretical, poorly written
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80 E DUARDO S ALAS AND K EVIN C. STAGL
and dull (Campbell, 1971 ). Today, the science of training has much to contribute
to facilitating the systematic development of individuals, teams, and organizations.
In this chapter we offered a translation mechanism for stakeholders charged with
designing systematic training. To the extent that the theories, principles, guidelines,
and best practice specifications presented herein are diligently applied, training solu-
tions will be better positioned to provide meaningful learning experiences.
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EXERCISES
Training planning
A large computer manufacturer experienced declining revenues during FY08. After care-
ful analysis, the executive team determined that global competitors were squeezing their
market share by offering a suite of comprehensive technical support services for their com-
puters. A mandate was issued from the c - suite to recruit and develop the human capital
required to offer similar services. As the chief learning officer it is your charge to ensure
your organization has proficient people in place by the close of the second quarter 2009.
To accomplish your objectives, develop a plan for what kinds of training will be con-
ducted, why training will be conducted, and how proposed solutions will contribute to
meeting the immediate, mid - range, and long - run needs of your organization. Be precise
in specifying what internal and external resources and support are required to design and
implement the process in a timely manner.
c04.indd 84 6/17/09 2:33:23 PM
84 E DUARDO S ALAS AND K EVIN C. STAGL
Training evaluation
A management consultancy was contracted by a medical supply firm to evaluate an
in-house training solution for medical representatives. Discouraged by the fi ndings that
medical reps were apparently not learning during training (as measured by post - training
reactions and declarative knowledge), yet seemed to be performing very effectively in the
workplace, the consulting house turned to you as a subject matter expert to review their
training evaluation study results. Describe the steps you will take to help the consultants
uncover the true impact of the training solution. Think through training design, criterion
identification, change measurement, and data analysis issues. State your recommendations
for conducting a stronger evaluation.
c05.indd 85 6/17/09 2:36:47 PM
5
Conduct Performance Appraisals
to Improve Individual and Firm
Performance
MARIA ROTUNDO
A performance appraisal is an evaluation of how well an individual achieves job - related
duties and responsibilities. It can be used to make administrative decisions about pro-
motions, terminations, and monetary/non - monetary incentives. Strengths and weak-
nesses are assessed in the process, and this information can be used to establish training
and development needs. Performance appraisals have been applied in the court of law
to justify employee terminations and to validate selection methods. Given the important
functions that a performance appraisal serves, it is not surprising to find that it is held to
such high psychometric standards and is scrutinized repeatedly by employers, employees,
researchers, the media, and even the courts when these standards are not met. This chap-
ter outlines basic principles that can be followed to improve the effectiveness of perform-
ance appraisals, especially with respect to improving an employee ’s future performance.
The process of conducting a performance appraisal includes two main stages: obtain-
ing accurate information about the individual ’s performance and communicating the per-
formance appraisal to the individual in a manner that maintains a high - performance work
culture. The chapter is organized according to these two stages. Key principles to follow
during each stage are offered.
The quest for accurate job - related information about individuals has plagued
researchers and managers for years, dating back to the early 1900s (Farr and Levy, 2007 ).
The body of knowledge that has been generated from years of research on accuracy can
be summarized by several key principles. It requires that performance in the workplace is
clearly defined and aligned with the organization’s strategy (Wright, Dunford, and Snell,
2001 ). Managers need to be cognizant of rater biases that distort performance ratings and
to recognize the importance of observing and recording performance - related information
on a continuous basis to reduce these errors. Multiple rating sources such as the self, peers,
c05.indd 86 6/17/09 2:36:47 PM
86 MARIA ROTUNDO
subordinates, or customers in some instances can provide additional performance - related
information but are subject to the same information - processing limitations (e.g. biases) as
ratings by managers. Behaviorally based performance appraisal instruments with clearly
defi ned scale anchors and job - related dimensions can be useful tools for documenting per-
formance appraisals. Training managers on the key principles involved in performance
appraisal can increase the accuracy of these ratings.
Accurate performance information is necessary but not sufficient for maintaining and
improving performance. The manner in which the performance appraisal is delivered
to the individual is equally important for achieving desired outcomes. Key principles for
managing the delivery process include goal setting, participative two - way communication,
coaching, and managing terminations. Following these principles can result in improved
performance and more favorable reactions to the appraisal and the appraisal process.
TO IMPROVE ACCURACY
Define job performance
The strategic planning process establishes a firm’s medium and long - term goals. The
top management team must translate these goals into individual level actions, behaviors,
and outputs that support the strategic plan ( Wright et al., 2001 ). How job performance
is conceptualized in the workplace stems in part from this planning process. Historically,
job performance was defined by a series of task statements that were derived from job
descriptions. Individuals were rated solely on the basis of the extent to which they carried
out these tasks (Fleishman and Quaintance, 1984 ). The workplace was considered to be
relatively static, and job descriptions were dusted off periodically, as they typically with-
stood the test of time. The workplace in this new millennium is characterized by constant
change. Success requires communication, ongoing learning, teamwork, effective relation-
ships, and sharing knowledge. Ethical standards discourage harmful behaviors and hold
individuals and the fi rm even more accountable for their actions.
Consequently, job performance is more than completing task requirements. It incorpo-
rates organizational citizenship behaviors (OCB) and counterproductive work behaviors
(CWB) (Rotundo and Sackett, 2002 ; Rotundo and Xie, 2008 ). Organizational citizenship
behavior (also referred to as contextual performance, extra - role behavior, etc.) includes
actions that go beyond task or technical performance. They facilitate the attainment of
organizational goals by contributing in a positive way to its social and psychological environ-
ment (Organ, 1997 ). OCB includes helping, protecting the organization from undeserved
harm, making constructive suggestions, and spreading goodwill (e.g. Podsakoff, MacKenzie,
Paine, and Bachrach, 2000 ). Counterproductive work behavior is an intentional act that
harms the well - being of the organization or its members (also referred to as deviance). It
includes absenteeism, production deviance, workplace aggression, theft, sabotage, and fraud
(Berry, Ones, and Sackett, 2007 ; Bennett and Robinson, 2000 ). OCB and CWB are not
opposite ends of a continuum. They can vary independently of one another (Dalal, 2005 ).
Criterion deficiency occurs when a performance appraisal is based upon incomplete
information. The appraisal does not take into consideration all job - relevant facets of a
person ’ s performance. Thus, defining performance is important for protecting against
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87 CONDUCT PERFORMANCE APPRAISALS
criterion deficiency. In addition, firms need to decide on the relative importance of these
three sets of behaviors (Rotundo and Sackett, 2002 ). To what extent does a fi rm value
OCBs in relation to task performance? To what extent are CWBs explicitly discouraged
or penalized? A firm’s values are useful here because they signal to the employees the pre-
ferred actions and behaviors, and they make clear how employees should perform their
jobs. Examples of such values include acting with integrity, and producing quality prod-
ucts (or providing quality services) in an environment that respects diversity and team-
work. Hence, the first step in obtaining accurate performance information is to defi ne job
performance in line with a firm’s strategy and values and to communicate this information
to all stakeholders. The focus in this chapter is on a fi rm’ s subordinates.
Observe and record performance frequently
Ideally, managers form impressions about their employees based on the behaviors or out-
puts they observe. If someone asks you for your opinion about a movie, it is diffi cult to
give an answer if you have not seen or heard the movie. Likewise, it should be diffi cult
to give your appraisal of an individual if you have not observed a representative sample
of the person’s performance behaviors or outputs. Unfortunately, there are competing
demands on managers ’ time. Their span of control is often quite large. Remote work is
becoming increasingly common making it increasingly difficult for managers to obtain ade-
quate performance samples for each employee. Thus, it becomes even more important for
managers to adopt a mindset of observing performance whenever the opportunities arise.
Criterion contamination occurs when information other than performance is refl ected
in the performance appraisal. Raters ’ impressions about employee performance are fre-
quently influenced by their biases (e.g. halo error). Raters ’ general beliefs and assumptions
about an employee, their likeability for the individual, and stereotypes about an employee
based on age, race and gender can contaminate a performance appraisal (Latham and
Mann, 2006 ). Continuously observing and recording performance behaviors can reduce
the extent to which these biases infl uence a rating.
Rating accuracy is affected by the delay between when an employee ’s behavior is
observed and when performance is actually rated (DeNisi and Peters, 1996 ). Performance
information is often acquired on an ad hoc basis, and in contexts not necessarily related to
performance evaluation. Keeping track of this information and documenting is as impor-
tant as frequent observations of an employee. Fortunately, there are tools that can help
managers organize performance information in a manner that makes it more accessible.
Performance categories help managers organize and structure their observations (Foti and
Lord, 1987 ). Examples of performance categories can include the three broad groups of
behaviors mentioned earlier (i.e. task performance, OCB, and CWB) as well as a firm ’ s
values (e.g. honesty). These category schemes can aid recognition and be recalled by man-
agers when they observe an employee.
Raters who keep performance logs or diaries of critical incidents and events organized by a
person can store and recall performance information more effectively and provide more accu-
rate ratings ( DeNisi, Robbins, and Cafferty, 1989 ). Only the pertinent information pertaining
to who, what, where, when, and why needs to be recorded. There are numerous electronic
means available to managers that can make this process easier (e.g. handheld devices).
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88 MARIA ROTUNDO
Utilize multiple sources of feedback
A boss is not the only source of performance information. Other internal and external
individuals who interact with and observe employees ’ performance from a different
perspective can provide meaningful information. These individuals typically include
peers, self, subordinates, and customers. Systems that use ratings from these additional
sources are referred to as multisource systems or 360 degree feedback. Multisource feed-
back systems can be traced back to the 1950s. It has been estimated that today about
40% of organizations use some form of multisource feedback (Bracken, Timmreck, and
Church, 2001 ).
Since raters from various perspectives have access to and observe diverse examples of
performance behaviors, they accumulate different knowledge about the individual, and
thus have the potential to contribute unique and valuable information to the performance
appraisal. However, it is not always the case that this information is consistent with what
is observed or reported by the manager. Raters observe an employee from different per-
spectives. Thus, they may not necessarily agree in their performance ratings (Harris and
Schaubroeck, 1988 ). Peer and self raters typically emphasize different dimensions of per-
formance when appraising an individual (Murphy, Cleveland, and Mohler, 2001 ; Smither,
London, and Reilly, 2005 ). Furthermore, regardless of the perspective of the rater, vari-
ation in performance ratings is associated more strongly with explicit or implicit stand-
ards of the individual raters than with the perspective of the rater (Mount, Judge, Scullen,
Sytsma, and Hezlett, 1998 ). In fact, 20 to 30% of the variation in performance ratings has
been found to be specific to the individual rater ( Viswesvaran, Ones, and Schmidt, 1996 ).
All the more reason to have multiple raters.
Peers, subordinates, and customers should comment on only those dimensions of per-
formance to which they have access, which is not necessarily all dimensions. Peers may
have more opportunities to interact with co - workers in person or via email and to observe
them working with customers than a supervisor. Thus, they may have a more representa-
tive sample of these types of behaviors to draw from when appraising interpersonal or
communication skills compared to other dimensions of performance. In contrast, managers
often have direct access to written reports that individuals have prepared as well as docu-
ments that summarize various objective outcomes (e.g. absenteeism, meeting deadlines,
work quality). This information is not usually available to peers. Hence, managers may
be in a better position to appraise certain dimensions of performance more accurately
than peers.
For managers with a large span of control, there may be too many peers in the group
from which to gather input. In these circumstances, a subsample of peers can be identi-
fied who work closely with the individual who is being rated. Nurses or retail sales staff
who work on the same shift or sales agents who are on the same team are reasonable
choices. They are able to comment on each other ’s performance more accurately than
individuals who work in different shifts or on different teams. Sometimes the individual
is asked to nominate two to three peers who are then later asked to provide appraisals. This
approach has serious risks because of obvious concerns about selecting only those peers
who will provide a favorable rating.
Customer feedback can uncover strengths and weaknesses in the product, service, or
supply chain. Technological advancements make it easier and more cost effective to gather
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89 CONDUCT PERFORMANCE APPRAISALS
customer feedback electronically instead of relying on paper surveys (e.g. Atwater, Brett,
and Charles, 2007 ). When the customer pool is large, feedback systems can be designed to
select customers at random.
Regardless of the perspective that is sought, building trust and acceptance of the mul-
tisource feedback system is also important. Anonymity among raters can reduce concerns
that the source of the rating might be revealed. This makes raters comfortable providing
honest feedback instead of inflated ratings (Atwater et al., 2007 ). In groups where there
are fewer than three raters, it is difficult to assure anonymity. Firms that are undergoing
significant restructuring or change might hold off on implementing a multisource feed-
back system because concerns around job insecurity or other consequences of restructur-
ing make it more difficult for individuals to trust the firm or its systems (Atwater et al.,
2007 ). An organizational culture that supports learning and development is important for
acceptance of a multisource feedback system (Atwater et al., 2007 ). Thus, information
provided by alternative sources can provide useful information.
Incorporating ratings from these other sources can improve performance (Atwater
et al., 2007 ; Smither et al., 2005 ). Individuals who either give or receive feedback from
peers display effective team behavior more often than individuals who do not either give
or receive peer feedback (Dominick, Reilly, and McGourty, 1997 ). Structured, face - to -
face developmental peer appraisals can have a positive impact on group member percep-
tions of open communication, group task focus, group viability, and member relationships
(Druskat and Wolff, 1999 ). Managers who receive feedback from subordinates and who
meet with the subordinates to discuss the previous year ’s feedback improve more than
managers who do not (Walker and Smither, 1999 ). Furthermore, managers who parti-
cipate in a leadership development program and who received evaluations from superi-
ors, peers, subordinates, and the self report that the most important rating sources were
subordinates, peers, then self, respectively, rather than superiors (Brutus, London, and
Martineau, 1999 ). In other research, managers showed improved performance six months
after an upward feedback program was implemented and feedback about leaders ’ behav-
ior from followers tended to promote generally positive changes in leaders ’ behaviors
(Atwater, Roush, and Fischthal, 1995 ; Smither, London, Vasilopoulos, Reilly, Millsap, and
Salvemini, 1995 ).
Develop behaviorally based performance appraisal instruments
The accuracy of a performance appraisal is influenced by the instrument that is used to
make the appraisal. This section describes both less effective methods and, more impor-
tantly, highlights the features of those that are effective. These features include behav-
iorally based measurement, job - related performance dimensions, and clearly defi ned scale
anchors. Although these features may appear straightforward and easy to implement, few
things are that easy and no appraisal instrument is without its limitations.
The comparative approach requires the rater to judge each individual against all others
in the group and then make an overall ranking across all individuals. This method is
not only cumbersome, it does not facilitate feedback. Employees respond negatively
because their ranking depends entirely on who else is in the group at the time of the rating
instead of on an absolute standard of performance. It is not always clear what performance
c05.indd 90 6/17/09 2:36:48 PM
90 MARIA ROTUNDO
criteria managers use in their ranking, which can pose legal problems when a performance
appraisal is challenged in the courts.
The Graphic Rating Scale consists of job - related traits (e.g. knowledge, teamwork,
communication) listed next to a 5 - point rating scale (for example), where a 5 represents
excellent or superior performance and a 1 represents poor or unsatisfactory perform-
ance. Although this approach is popular and easy to develop, it does not indicate what the
employee needs to do to improve performance (e.g. teamwork).
The behavioral approach has the greatest research support of all of the apprais-
al methods. The most well - known examples of a behaviorally based instrument are the
Behaviorally Anchored Rating Scale (BARS) (Smith and Kendall, 1963 ) and the Behavioral
Observation Scale (BOS) (Latham and Wexley, 1994 ) (see Tables 5.1 and 5.2 for examples).
Typical characteristics of methods that fall under this approach include a clearly defi ned set
of performance dimensions that are job related and linked to the fi rm’ s strategy. Managers,
job incumbents, and experts participate in all stages of its development making users more
comfortable with the terminology because they understand it. Any discrepancies in what is
considered to be important, or in what the standards of performance are, can be resolved
in the development stage. The rating scale includes information that brings meaning to
the numbers ranging from 1 to 5 or 7 reflecting poor or exceptional performance. Rather, the
scale anchors are defi ned in behavioral terms and represent critical incidents of effective or
ineffective performance derived from a job analysis.
The behavioral approach minimizes concerns about criterion deficiency or contamin-
ation that were discussed earlier. The detailed job - related information in the instrument
guides managers and increases their understanding of which behaviors are important
and what the standards of performance are. Thus, there is greater standardization across
raters and less ambiguity and inconsistency in their ratings. Furthermore, it is conducive to
Table 5.1 Example of a behavior-anchored rating scale for the job of a manager: the
performance dimension is crisis management
Performance dimension: crisis management
5 Responds immediately. Is aware of the needs of relevant individuals and proactive
in addressing the needs. Communication is ongoing and frequent. Provides vision,
leadership, direction, and reassurance.
4 Response is quick. Takes charge of the situation. Ensures all necessary individuals
are in place. Provides direction.
3 Response is well organized and thorough. Contacts relevant individuals immedi-
ately. Provides direction in some aspects of the crisis.
2 Response is adequate and within acceptable time frame. Contacts most individu-
als who need to be informed. Provides some direction but still relies heavily on
others’ leadership.
1
Fails to recognize the nature/magnitude of the crisis. Does not appreciate the poten-
tial implications of the crisis. Relies on others to show direction and leadership.
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91 CONDUCT PERFORMANCE APPRAISALS
Table 5.2 Example of a behavior observation scale for the job of a manager: the
performance dimension is problem solving
Performance dimension: problem solving
Almost Never 1 2 3 4 5 Almost Always
_____ Analyzes complex problems.
_____ Persists even when the solution is not clear or obvious.
_____ Develops new methods for solving problems.
_____ Implements innovative solutions.
_____ Takes responsibility for diffi culties in the group.
_____ Addresses diffi culties in the group.
_____ Seeks advice of team members and others when needed and appropriate.
providing feedback to individuals that they can understand because the feedback is about
observable job behaviors. Hence, individuals react favorably to these instruments (Tziner
and Kopelman, 2002 ). Given the prevalence of rater errors, the bias in observation,
recall, and the evaluation of performance, the importance of features like these cannot be
overemphasized.
One other approach that should be mentioned is the traditional results - based method
of rating individuals. The emphasis here is on whether the individual achieves the objec-
tive output that is established at the onset of the rating period (e.g. total sales per month).
Although results - based measures are objective indicators of an employee ’s performance,
and are less susceptible to the rater biases noted above, they are not without their draw-
backs. Individuals may fail to meet the objectives as a result of factors beyond their control
(e.g. poor economy, organizational constraints). However, these constraints are not always
apparent to all stakeholders, nor are they agreed upon. It can be demotivating to receive
less favorable appraisals in these circumstances. This approach makes it difficult for a
manager to provide developmental feedback because it is not always clear why the objec-
tive or target was not met and managers and employees may have different explanations.
Although some firms still use the results - based approach in performance appraisal, it is
often combined with a behavioral component. Lincoln Electric has one of the most talked
about piece rate systems where individuals are evaluated and paid on the basis of objective/
quantifiable output (Hastings, 1999 ). However, this system also includes a behavioral
component in which individuals are rated on the job dimensions of dependability, quality,
ideas, and cooperation in addition to output. A more recent example of a results - oriented
appraisal system can be found at Best Buy ’s corporate headquarters, where it implemented
a Results Oriented Work Environment in 2003 (Conlin, 2006 ). In this system, there are no
schedules and very few mandatory meetings. Individuals are free to work wherever they want,
whenever they want, as long as they achieve the results they agree to. Best Buy indicates that
productivity has increased and voluntary turnover has decreased (Conlin, 2006 ).
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92 MARIA ROTUNDO
Train raters
The effectiveness of any performance appraisal instrument also depends upon how well
managers understand it, buy into it, and use it (Tziner, Murphy, and Cleveland, 2001 ).
Rating employee performance is one of the most important responsibilities of managers.
It is also among the most dreaded tasks. More often than not, this skill is developed by trial
and error. Managers learn how to rate performance from the mistakes they make along
the way rather than by any systematic attempt to improve their skill at observation, recall,
and evaluation, and thus their self - efficacy as a rater. Even the courts recommend that
raters receive training on the principles for conducting accurate and effective performance
appraisals (Latham and Wexley, 1994 ).
Training managers can increase the accuracy of their ratings. But, the extent to which
their accuracy increases depends on the content of the training and the characteristics
of the training process. Highly structured and interactive workshops that provide participants
with the opportunity for practice and feedback regarding their own rating patterns tend to
be more effective than lecture - style information - only programs that simply describe how
to rate performance more effectively (Latham and Wexley, 1994 ).
Programs in which norms for desired behaviors and effective performance are devel-
oped on site and used in the training to provide a common frame - of - reference have also
shown favorable results (McIntyre, Smith, and Hassett, 1984 ). This style of training,
labeled frame - of - reference, has the objective of standardizing raters ’ perceptions of the
relevant job behaviors and standards of effective and ineffective performance (Bernardin
and Buckley, 1981 ). Although most BARS and BOS instruments facilitate this standard-
ization, it is also important to train the managers to be aware of these processes.
Training designed to improve raters ’ observational skills or decision - making skills
related to performance appraisal has increased rater accuracy when delivered in the inter-
active workshop format (Hedge and Kavanagh, 1988 ). Training designed to reduce the
classic rating errors (i.e. halo or leniency) has also been shown to be effective at decreasing
these errors (Latham, Wexley, and Pursell, 1975 ).
In summary, the key elements of training programs that improve accuracy and reduce
rater errors include (a) establish as part of the training job - relevant performance dimen-
sions that are defined in behavioral terms, (b) establish examples of effective/ineffective
performance with specific behaviors that reflect a 7 out of 7 compared to a 3 out of 7,
etc., (c) provide an interactive session in which participants observe, evaluate, and discuss
individuals who are presented on videotape performing at different levels, and (d) provide
the participants with feedback on the accuracy of their ratings and provide them with
additional opportunities to practice.
HOW TO IMPROVE PERFORMANCE
Accurate information is essential but not sufficient for appraising performance effectively.
The manner in which the performance appraisal is communicated to the individual and
how it is used for long - term planning are equally important for improving employee per-
formance. The significance of this step is often underestimated. Hence, it can be the source
of perceptions of unfairness, cause misunderstandings between the manager and employee,
and lead to job dissatisfaction. This step is not the easiest part for managers especially when
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93 CONDUCT PERFORMANCE APPRAISALS
the performance appraisal that the manager has to communicate is negative, or when the
employee has to be terminated (Tziner, 1999 ). However, the principles of goal setting, two -
way communication, and coaching can make this process easier for both parties while
maintaining the desired performance culture.
Goal setting
A performance appraisal, whether positive or negative, can be more effective when it is
followed by goal setting (Locke and Latham, 1990 ). The body of research on the role of
goal setting in improving performance, largely conducted by Latham and colleagues, can
be summarized by several fundamentals. Goals that are specific and challenging yield
greater improvement in performance than goals that are easy or moderate. These effects
have been demonstrated in laboratory and field settings and in various jobs ( Latham and
Locke, 2007 ). Goals help individuals decide where to direct their effort or on which tasks
to focus their attention. Setting specific goals can reduce ambiguity in what is expected
from the individual and make something that seems abstract or unachievable more con-
crete. The amount of effort to exert on tasks and the persistence of that effort is guided by
how challenging the goals are (Latham and Wexley, 1994 ). Challenging goals can be more
motivating because they provide a sense of accomplishment when achieved. Goals that
are defined in behavioral terms make it easier to provide action - oriented feedback when
goals are not attained and to establish the reason why ( Latham, Locke, and Fassina, 2002 ).
A longitudinal study of executives revealed that leading fi rms develop specifi c action plans
for individuals at all levels of performance regardless of whether they are high potential,
average, or poor performing individuals ( Michaels, Handfi eld-Jones, and Axelrod, 2001 ).
The motivating potential of goal setting depends upon how committed employees are
to the goals. A large part of goal commitment rests upon basic principles of learning and
coaching ( Latham and Wexley, 1994 ). Employees need to believe that they can achieve the
goals, even if they know that doing so will be difficult. Involving employees in the process
and setting a reasonable number of goals (e.g. three to seven goals) can increase their self -
efficacy, namely their belief that the goals are attainable. Individuals should perceive that
goal achievement will lead to positive outcomes, that the positive outcomes will be realized
after goal attainment, and that the outcomes are actually valued ( Latham, 2001 ). The out-
come can be a favorable performance appraisal, positive feedback, monetary rewards, or
other intrinsic or extrinsic rewards. Regardless of the type of consequence, the employee
needs to believe that the performance – outcome link exists. These conditions explain in
part why setting goals can improve performance.
Two - way communication
One of the more difficult parts of the performance appraisal process is delivering the
performance evaluation to the individual. Traditionally, managers filled out an appraisal
form for each individual and shared the rating with the employee in a meeting. Rarely was
the employee given any input or voice in the appraisal process. It is not surprising to fi nd
that this approach can lead to perceptions of bias and unfairness, and is unsuccessful when
challenged in the courts.
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94 MARIA ROTUNDO
Performance appraisals that are based upon elements of due process are perceived to be
fairer ( Taylor, Tracy, Renard, Harrison, and Carroll, 1995 ). These elements include knowl-
edge of job - relevant performance dimensions (i.e. define job performance in line with the
organization’s strategy and values and train raters), judgment based on a representative
sample of behaviors (i.e. observe and record performance frequently and document using
a behavioral performance appraisal instrument), and meetings that invite input from the
individual (Folger, Konovsky, Cropanzano, 1992 ). The first two elements were covered in
the section on accuracy and the third element will be discussed below.
The performance appraisal meeting is an essential part of communicating the perform-
ance appraisal. However, the thought of having to convey a less than favorable evaluation
face to face can leave managers feeling uncomfortable and preferring to schedule a phone
or lunch conversation or combining it with a meeting about something else altogether.
But, the meeting should take place in person. The manager should be attentive during the
meeting. Answering telephone calls or checking email sends conflicting messages. Setting
aside time to meet and discuss performance signals the importance the firm places on the
performance appraisal process and how much the fi rm values that individual.
The manager should recognize employees for goal attainment and explain how the
goal helps the group, the firm, and the individual ’s career development. Managers should
focus the discussion around the individual ’s actions and behaviors and not their personal-
ity. In circumstances when the goals are not attained, the manager should solicit input
from the individual as to why. The meeting should not be the first time that the individual
or manager is learning about a performance problem. If an employee is repeatedly late,
this problem should be addressed immediately instead of waiting until the formal per-
formance appraisal interview. If this pattern of behavior continues, even after repeated
attempts to correct it, the performance appraisal meeting can be used to provide quan-
titative information on lateness frequency. During the meeting, the manager is advised
to focus on the act of being late rather than on labeling the individual unreliable or lazy.
The manager should focus on trying to solve the problem and be supportive, as the two
parties try to reach an agreement on a remedy. This process of two - way communication
is central to the success of the meeting. Research indicates that when these steps are fol-
lowed, individuals perceive the process to be fairer ( Taylor et al., 1995 ).
Ask for self - assessment
Managers should ask the employee for a self - assessment prior to the performance meeting.
The self - assessment helps individuals reflect on their performance throughout the year and
to justify their self - rating. The self - appraisal can be completed with the same instrument
and language that the manager uses to make the appraisal (e.g. job relevant performance
dimensions and anchors defined in behavioral terms), thereby further reducing ambigu-
ity in what behaviors are being evaluated. Both parties should be prepared to discuss any
discrepancies between the two appraisals. Although research suggests that there isn’t always
agreement between self - appraisals and appraisals from other sources, when a behaviorally
oriented appraisal instrument is used, there is greater agreement between the individual
and supervisor (Schrader and Steiner, 1996 ). Furthermore, the exercise of going through
a self - evaluation can pinpoint the sources of some misunderstandings and facilitate the
c05.indd 95 6/17/09 2:36:49 PM
95 CONDUCT PERFORMANCE APPRAISALS
discussion. When the individual ’s input is factored into the appraisal, they perceive that
they have been treated fairer than when it is not and report higher motivation to improve
performance and greater satisfaction with the process (e.g. Cawley, Keeping, and Levy,
1998 ; Erdogan, Kraimer, and Liden, 2001 ).
Coach employees
Coaching as discussed here refers to the role of a “ manager as coach ” and not the coach
as a third party who has been hired by the firm to help the employee develop specifi c
skills. The formal performance appraisal may take place once a year. However, a man-
ager should be coaching employees and providing feedback on an ongoing basis through-
out the year. Historically, the manager ’s role was perceived to be one of “ command and
control. ” The manager derived power from the knowledge or information that he or she
possessed and control from deciding when to disseminate it to the group. This style has
become outdated and replaced by the “ manager as coach ” model. Year- round coaching
that includes goal setting, participative communication, and problem solving improves
productivity (Olivero, Bane, and Kopelman, 1997 ).
The foundation to effective coaching is the working relationship that a manager estab-
lishes with each individual. Although a manager may interact with some individuals more
often than others, and may even feel a more positive affect toward some of them (Varma,
DeNisi, and Peters, 1996 ), it is the responsibility of the manager to know each person
and to be as objective as possible in making assessments. Mutual trust and respect are an
important part of the coaching relationship (see Chapter 21 ). Not only do subordinates
need to trust their manager and believe that the manager wants them to succeed, managers
also need to trust their subordinates ’ motivations and intentions. By focusing on common
goals, both parties can learn to accept each other for who they are even though they may
not always agree on an appraisal.
An essential part of the “ manager as coach ” is to address performance incidents directly
and immediately (e.g. Campbell and Garfi nkel, 1996 ). When a manager observes or
learns that an employee has a performance problem, the manager should gather information
from all the relevant parties about the specifi cs of an incident instead of assuming a set of
circumstances, over- reacting, or laying blame. Their goal is to remedy the problem and
remind the parties of the proper procedures/behaviors that are to be followed, why they
matter, and then to ask for a justification as to why the procedures were not followed.
Gathering input about “ why ” it happened is important because this information may
reveal or uncover a flaw or breakdown in systems, a deeper problem, or training needs.
As indicated earlier, managers should focus on the actions of individuals involved in the
incident instead of criticizing the person. If managers ignore these incidents instead of
addressing them directly when they occur or shortly after, employees may conclude that
the incident did not represent a transgression, even if it was a transgression, that it is not
that important or doesn’t really matter. If managers wait until the formal performance
appraisal to address the behavior, the causes of the problems may have escalated and
become so severe or relationships may be permanently damaged.
Examples of exceptional performance should also be rewarded even if simply with
“ praise ” or verbal recognition. Acknowledging good performance sends the message that
good things also get noticed, not just the bad things. Regardless of the positive or negative
c05.indd 96 6/17/09 2:36:50 PM
96 MARIA ROTUNDO
circumstances, managers should follow up with the employees to see if performance has
improved or if any problems persist.
Managers should use a common language around job performance when coaching
individuals. The first half of the chapter detailed the importance of defining job per-
formance and designing an instrument around job relevant performance dimensions.
Managers should use the same language when coaching individuals. Ambiguity in what
is expected is reduced when individuals hear and see managers using this performance
language repeatedly in their daily or weekly interactions. This consistency in language
also reinforces the performance and feedback culture of the department and more broadly
of the fi rm.
Manage the separation process of poor performers
Not everyone succeeds. Even valid selection systems are imperfect. Some individuals are
assessed as having a high likelihood of performing well when in fact they do not. There
will be occasions when the requisite ability and motivation is lacking; hence, these individ-
uals should be terminated. However, the separation process needs to be handled carefully
because perceptions of injustice can have psychological, not to mention physiological,
consequences on the individual and increase the risk of litigation for the fi rm (Latham
and Wexley, 1994 ; Roehling and Wright, 2006 ).
The assumption is that employees want to perform their job at least to an average level.
If they are not performing there must be an explanation. For example, it may be the case
that an employee is unaware of the poor performance, has different standards for what
is considered to be an acceptable level of performance, argues that the poor perform-
ance is beyond their control and due to on - the - job constraints such as defective equip-
ment, argues that they did not receive adequate training, believes that the manager holds
a grudge against the employee, or is experiencing personal problems outside of work that
are impeding the performance.
Before it is decided that termination is the answer, the manager should gather informa-
tion and work with the individual to determine the underlying cause of the poor perform-
ance. This approach seeks to remedy the problem if possible and gives the employee an
opportunity to improve. All possible alternative explanations, other than the employee does
not have the ability or motivation to perform, should be ruled out before it is concluded
that the employee should be terminated. The firm will be expected to provide strong docu-
mented evidence of poor performance and that the performance deficiency is dimensionally
related to the job. Some firms have a policy of progressive discipline that must be followed
before terminations are made. This process typically includes verbal warnings followed by
written warnings and then termination.
CASE EXAMPLES
The two cases described below are based upon true stories of employees ’ experiences
with the performance appraisal processes at firms. The first case illustrates a less effective
style of managing performance problems. The second case illustrates how a manager can
help an employee improve on certain dimensions of performance by applying some of the
principles outlined in this chapter.
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97 CONDUCT PERFORMANCE APPRAISALS
The case of Peter
Tom Ross leads a group of electrical engineers who work in research and develop-
ment. Although Tom is satisfied with the performance of the group, the behavior of one
of its members, Peter, is posing problems for the team. Peter also happens to be one of
the stars. Unfortunately, Tom has not spoken to Peter about the behavior because he
is afraid that it will create tension and that Peter might threaten to leave the firm in the
middle of the project. Tom prefers to ignore the problem and to focus on meeting
the project deadlines.
Tom keeps written records of all team members ’ achievements and performance prob-
lems. He reviews his record of Peter:
◆
Is late or misses meetings and expects to be briefed when he arrives, disrupting the
flow of the meeting (e.g. missed meetings in September and November and was 20
minutes late for all other meetings).
◆
Is often impatient and interrupts team members who take a little longer to get to the
point (e.g. interrupts members repeatedly and has sighed when some members speak).
◆
Appears headstrong and inflexible in his opinion even when evidence supports an
alternative (e.g. decision to switch suppliers and cost - cutting strategy).
◆
Says what comes to his mind even if it offends team members (e.g. told a member
that her report was elementary and shouted at a member when he suggested an
extension on the deadline).
◆
Helps team members prepare their presentations (e.g. spent all day one Saturday
helping a member with his presentation).
◆
Has a wide network of contacts that he shares with the team.
◆
Introduces team members to potential mentors (e.g. had members contact Peter ’s
former colleague about suppliers).
Tom lacks the self - efficacy to handle this problem and believes that if he just ignores
Peter ’s quirks the group will finish the project on time without upsetting the flow. He tells
the other team members to be patient and to focus on Peter ’s strengths. However, the
problems intensify and two team members quit, leaving Tom short staffed and behind
schedule.
The case of Sue
John Lee is a division engineer for a large aerospace firm. As division manager he is in
charge of a staff of over 50 professional and technical personnel. Five of these professionals
are designated as project engineers responsible for specific contracts. John has been busier
than usual lately taking care of last minute details on a new contract and has left the
project engineers on their own.
One of the project engineers is giving him reason to worry. John has heard rumors that
Sue Wells (who joined the firm six months ago) is extremely aggressive with co - workers
and difficult to work with. Others say that Sue does not always follow the rules and pro-
cedures but rather acts quickly before getting answers or consensus from her team. Sue is
one of the strongest and most knowledgeable performers.
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98 MARIA ROTUNDO
More specifically, John learned the following about Sue ’s performance over the last few
months:
◆
Clients indicate that she is extremely knowledgeable about the project and willing to
respond to their requests for modifi cations.
◆
Has good awareness of “ problem clients ” in the industry and has advised the fi rm
wisely to avoid certain deals.
◆
Always blames others when things do not work out. A month ago a client backed
down on a contract. Sue returned to the office and yelled at the administrator and
team member who helped her manage the contract. She blamed them for the
client ’s decision and accused them of sloppy and slow work. In reality, the client ’s
decision had nothing to do with sloppy work. More recently, Sue noticed an error
on a client report during the middle of her meeting with a client. She went back to
the office and yelled at the team for their failure to notice the error. In reality, the
team did notice the error and warned Sue about it but she did not respond.
John decided that he needs to meet with Sue to discuss these concerns and other
things. It has been about two months since their last discussion. Below are the details of
that meeting.
J
OHN: Hi, Sue, how do you feel the last few months have been going for you here.
SUE: There have been ups and downs. I get frustrated by how slow people are in
giving me the information that I need. If I wait for answers, I am afraid that the
clients will get impatient and go elsewhere. We lost a client because of this.
JOHN: I remember that client. What happened?
SUE: I went to visit the client expecting that we were ready to close on the contract
but the client pulled out. They told me that they received a better response and
service from one of our competitors. I knew that this would happen. So, I went
back to the offi ce and made sure everyone on the team knew about this and that
they could have prevented it from happening if they just listened to me and worked
faster and better.
JOHN: I see – but I think everyone here is working really long hours just to keep up.
With respect to that contract that we lost, most of the team worked overtime and
took work home on weekends in an effort to turn it around quickly. I am not sure
that we can expect more of them. The team felt very bad when they were blamed
and told that they worked too slow and were sloppy. It is easy for us to get frus-
trated about a lot of things but we cannot take out these frustrations on the group.
We are a team and need to work together on projects and respect each other. They
know that you work hard too and want to help you.
SUE: Oh – I didn’t mean to offend anyone – I was just so disappointed that we lost
the contract and probably over- reacted. What bothers me is that if processing con-
tracts quicker gives us an edge over competitors, I just don’t see why people can’t
work faster so that we get the contracts done sooner or why there are so many steps
in the process anyway. We could have a much quicker turnaround if we removed
even just two steps.
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99 CONDUCT PERFORMANCE APPRAISALS
J
OHN: Times are changing and there are more checks and balances today than ever . .
. we need to manage our own expectations around timing of contracts and the expec-
tations of the clients. There are ways to do this. How about giving Pam in Division II a
call – she has a few strategies that might help. Most fi rms face the same constraints and
legal obligations as we do with respect to approving contracts. Perhaps we can revisit
the approval process during our planning meeting next month. We can also review the
workload of our support staff to see if we need to expand the group or if there are any
redundancies in procedures. How about keeping track of the situations when you feel
that things are going too slow and talking to me about them to see if/where we can
modify things.
S
UE: I can do that.
Sue learned a lot from that discussion. She apologized to the team and thanked
them for all of their hard work. She explained her concerns and asked for their input
on the procedures. Together they prepared a plan for modifying approval procedures
that conformed to legal requirements. They presented the plan to the manager at the
next planning meeting and he agreed to circulate it to managers in other departments
for their input.
CONCLUSION
The performance appraisal process has been criticized by employees, managers, and the
courts as being biased, unfair, difficult to conduct, and invalid. Despite these concerns,
the performance appraisal serves a necessary function in the workplace, and is not likely
to go away. The principles of effective performance appraisal discussed throughout this
chapter alleviate the criticisms noted above and can help managers realize the positive
outcomes that are possible with an effective performance appraisal system.
To summarize, one step to achieving performance gains from this process is
to make sure that the appraisal is based upon accurate performance information.
Adopting a mindset of observing and recording performance as frequently as poss-
ible provides managers with the opportunity to deliver feedback about effective or
ineffective performance immediately (as opposed to waiting until the end of the
performance cycle). It also supplies them with a representative sample of behav-
iors that they can refer to when conducting and delivering the formal appraisal.
Training managers on the performance appraisal process and using a performance
appraisal instrument in which job - related performance dimensions and anchors are
clearly defined can facilitate the process of documenting accurate information and
delivering feedback that is developmental. Gathering input from alternative sources
such as peers or customers can supplement the manager ’s perspective.
Another important step involves how the performance appraisal is communicated
to the employee and used to set objectives and employee development. Performance
appraisal meetings that invite input from the individual and that focus on job - related
behaviors create an environment that is supportive, where both parties can reach
solutions to any potential problems. The process of setting challenging and specifi c
goals that are to be achieved during the next performance cycle help the individuals
know where they need to focus their effort. Although the formal appraisal meeting
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100 MARIA ROTUNDO
may take place once per year, ongoing feedback and coaching by the manager facili-
tates the learning and development process. The application of these principles has
been shown to improve performance.
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EXERCISES
Develop a performance appraisal instrument
Individuals and/or groups can learn a lot from going through the process of developing a
performance appraisal instrument for their current job or for one of their group projects
(if they are taking a course). Individuals/groups can apply the principles described in the
section on accuracy (summarized below).
1. Reach agreement on what the deliverable is. For example, if the assignment is to
conduct a “ case analysis of an assigned case, ” a deliverable can be a “ written report
that analyzes an assigned case. ” More specifically, it can be a written report that
identifies the strengths and problems inherent in the case, analyzes the problems
using theories and concepts covered in the course, and provides recommendations.
2. Establish the group ’s goal with respect to the quality and standards of the written
report. For example, is the group ’s goal to obtain an A grade on the assignment or
to learn from the project, both, or something else altogether.
3. Establish the major responsibilities of each group member and translate these
responsibilities into specifi c goals or actions.
4. Establish dimensions of performance and define them in behavioral terms.
Dimensions can be grouped according to task dimensions, OCBs, and CWBs. Task
dimensions can include timely submission of material to group members, depth of
analysis of problems indentified in the case, appropriate use of theories, etc. OCBs
can include reviews team members ’ submission, respects team members, shares
important information, etc. CWBs can include conforms to university policy and pro-
cedures regarding code of conduct, is not late or absent from meetings, etc.
5. Establish standards of performance for each dimension using clearly defi ned
anchors on the rating scale. For example, on the job dimension “ attendance ” (7
attends all meetings, 2 missed half of the meetings).
Conduct a self - appraisal
Another useful exercise is to ask individuals to rate their own performance. Using the
performance appraisal instrument at your current employer (or former place of employ-
ment, or the instrument developed in the above exercise), conduct a self - appraisal and be
prepared to deliver your self - appraisal to your boss, a peer, or the group. Remember to
keep in mind the principles outlined in this chapter when appraising your own performance
c05.indd 104 6/17/09 2:36:52 PM
104 MARIA ROTUNDO
and delivering the appraisal. This exercise can help individuals appreciate the diffi culty of
this process.
Evaluating a performance appraisal process
A valuable exercise is to ask individuals to evaluate a performance appraisal they experi-
enced personally (or the performance appraisal process) at their current employer or their
former place of employment against the principles outlined in this chapter. They are
asked to consider the following information in their evaluation:
1. What are the dimensions of performance on which they were rated? Were these
dimensions defi ned?
2. Were the standards of performance made clear to them and were they defi ned?
3. Did their boss only provide the appraisal or were alternative sources also
considered?
4. Describe the performance appraisal instrument.
5. Describe the process of how the performance appraisal was communicated to them.
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Part III
TURNOVER AND SATISFACTION
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c06.indd 107 6/17/09 2:38:45 PM
6
Promote Job Satisfaction through
Mental Challenge
TIMOTHY A. JUDGE AND RYA N KLINGER
The most popular defi nition of job satisfaction was supplied by Locke ( 1976 ), who defi ned
it as “ . . . a pleasurable or positive emotional state resulting from the appraisal of one ’s job
or job experiences ” ( p. 1304). There are many possible influences on how favorably one
appraises one ’s job, and numerous theories of job satisfaction have attempted to deline-
ate these infl uences. Empirical evidence, however, has suggested only one clear attribute
of the work itself that consistently influences job satisfaction – the cognitive challenge of
the work. This leads to the general principle that will be the focus of this chapter – that
mentally challenging work is the key to job satisfaction. Thus, the most effective way an
organization can promote the job satisfaction of its employees is to enhance the mental
challenge in their jobs, and the most consequential way most individuals can improve
their own job satisfaction is to seek out mentally challenging work.
Before discussing this principle in more detail, however, it is important to demonstrate
the importance of the principle. Scores on a valid measure of job satisfaction are the most
important pieces of information organizations can collect, not only as one measure of
management effectiveness, but because, as we will note, job satisfaction scores predict a
wide range of job behaviors. Yet, many organizations openly question whether they need
to be concerned with job satisfaction. One study of how job satisfaction is viewed by man-
agers (Judge and Church, 2000 ) drew the following comments:
◆
“ Job satisfaction is virtually never discussed in the senior staff meetings I attend
within our business unit. ”
◆
“ Job satisfaction is not measured. Because this is Wall Street, money talks. If people
weren’t happy, they could have moved their whole team elsewhere.”
◆
“ Job satisfaction is not measured or considered at all. ”
◆
“ There is some questioning of whether job satisfaction is desirable anyway.”
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108 TIMOTHY A. JUDGE AND RYAN KLINGER
Organizations would be well advised to place more importance on job satisfaction. It is
related to many outcomes that individuals and organizations find important. Some of the
outcomes that job satisfaction has been linked to are:
◆ Job performance. The relationship between job satisfaction and performance has an
interesting history. In 1985, a quantitative review of the literature suggested that
the true correlation between job satisfaction and performance was quite small
( Iaffaldano and Muchinsky, 1985 ). However, more recent evidence reveals that the
relationship is larger than was previously thought. A comprehensive review of 300
studies determined that when the correlations are corrected for the effects of sam-
pling error and measurement error, the average true score correlation between over-
all job satisfaction and job performance is .30 ( Judge, Thoresen, Bono, and Patton,
2001 ). Thus, it does appear that a happy worker is more likely to be a productive
one. Evidence also exists for a relationship at the work unit level – units whose aver-
age employees are satisfied with their jobs are more likely to perform at a higher
level than business units whose employees are less satisfied, and to be more prof-
itable as a result (Harter, Schmidt, and Hayes, 2002 ). Of course, the relationship
between satisfaction and performance may be reciprocal. Not only may employees
who are happy with their jobs be more productive, but performing a job well may
lead to satisfaction with the job, especially if good performance is rewarded (see
Chapters 12 and 13 , this volume).
◆ Withdrawal behaviors. Job satisfaction displays relatively consistent, negative correla-
tions with absenteeism and turnover. Job dissatisfaction also appears to display neg-
ative correlations with other specific withdrawal behaviors, including unionization,
lateness, drug abuse, and retirement. Furthermore, Harrison, Newman, and Roth
( 2006 ) and Fisher and Locke ( 1992 ) have shown that when these specifi c behaviors
are aggregated as indicators of a general withdrawal syndrome, job satisfaction is
quite predictive.
◆ Life satisfaction. Evidence indicates that job satisfaction is also moderately to strongly
related to one outcome that individuals find particularly important – life satisfac-
tion (Tait, Padgett, and Baldwin, 1989 ). Since the job is a significant part of life,
the correlation between job and life satisfaction makes sense – one ’s job experiences
spill over onto life. Thus, people who have jobs that they like are more likely to lead
happy lives.
Thus far, job satisfaction has been defined and it has been shown that job satisfaction
matters. Thus, any principle that reveals how best to promote job satisfaction is important
to understand. With this foundation, in the next section of the chapter, the model that
best describes the principle – that job satisfaction is best achieved through mentally chal-
lenging work – will be reviewed.
JOB CHARACTERISTICS MODEL
The theory that best describes the role of the work environment in providing mentally
challenging work is the Job Characteristics Model ( JCM). The Job Characteristics Model
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109 PROMOTE JOB SATISFACTION THROUGH MENTAL CHALLENGE
argues that the intrinsic nature of work is the core underlying factor causing employees
to be satisfied with their jobs. The model, in its full explication by Hackman and Oldham
( 1980 ), focuses on five core job characteristics that make one ’s work challenging and ful-
filling: (1) task identity – degree to which one can see one ’s work from beginning to end;
(2) task significance – degree to which one ’s work is seen as important and signifi cant; (3)
skill variety – degree to which the job allows employees to do different tasks; (4) autonomy –
degree to which employees have control and discretion for how to conduct their job; (5)
feedback – degree to which the work itself provides feedback for how the employee is
performing the job. According to the theory, jobs that are enriched to provide these core
characteristics are likely to meet individuals ’ needs for mental challenge and fulfi llment in
their work, and thus will be more satisfying and motivating to employees.
Measurement of job characteristics
There are various ways intrinsic job characteristics can be measured. Arguably the most
common approach relies on the Job Diagnostic Survey ( JDS) to measure the extent to which
the five core intrinsic job characteristics are present in the job (for an alternative approach,
see Morgeson and Humphrey’s ( 2006 ) Work Design Questionnaire). Items from the JDS
appear in Table 6.1 . When responding to items in the table, individuals circle the number
(from 1 to 7) that is the most accurate description of their job. The JDS can be used to
rate almost any type of job. Ideally, one would give the JDS to a number of people in an
organization within a job type to get a reliable measurement of the job characteristics. The
JDS is not copyrighted and thus is free to use. However, care must be taken in administer-
ing the JDS. The reader interested in measuring intrinsic job characteristics should consult
Hackman and Oldham ( 1980 ), who provide all of the JDS items, along with an excellent
discussion of administrative issues.
Research support
There are several indirect pieces of evidence supporting Hackman and Oldham ’s model.
First, when individuals are asked to evaluate different facets of their job such as pay,
promotion opportunities, co - workers, and so forth, the nature of the work itself gener-
ally emerges as the most important job facet (Judge and Church, 2000 ; Jurgensen, 1978 ).
Second, of the major job satisfaction facets – pay, promotion opportunities, co - workers,
supervision, and the work itself – satisfaction with the work itself, far and away, best pre-
dicts overall job satisfaction (Rentsch and Steel, 1992 ). Thus, if we are interested in under-
standing what causes people to be satisfied with their jobs, the nature of the work (intrinsic
job characteristics) is the first place to start. Unfortunately, managers often think employ-
ees are most desirous of pay to the exclusion of other job attributes such as challeng-
ing work. For example, a 1997 survey indicated that, out of 10 job attributes, employees
ranked interesting work as the most important job attribute (good wages was ranked fi fth),
whereas when it came to what managers thought employees wanted, good wages ranked
fi rst while interesting work ranked fi fth (Kovach, 1997 ).
Research directly testing the relationship between workers ’ reports of job characteristics
and job satisfaction has produced consistently positive results. Humphrey, Nahrgang, and
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110 TIMOTHY A. JUDGE AND RYAN KLINGER
Table 6.1 Measurement of intrinsic job characteristics: the Job Diagnostic Survey
1. How much autonomy is there in your job? That is, to what extent does your job permit
you to decide on your own how to go about doing the work?
1----------------2----------------3----------------4----------------5----------------6----------------7
Very little; the job gives me Moderate autonomy: many Very much; the job gives
almost no personal “say” things are standardized and me almost complete
about how and when the not under my control, but responsibility for deciding
work is done. I can make some decisions how and when the work
about work. is done.
2. To what extent does your job involve doing a “whole” and identifiable piece of work? That
is, is the job a complete piece of work that has an obvious beginning and end? Or is it
only a small part of the overall piece of work, which is finished by other people or by
automatic machines?
1----------------2----------------3----------------4----------------5----------------6----------------7
My job is only a tiny part of My job is a moderate-sized My job involves doing the
the overall piece of work; the “chunk” of the overall piece whole piece of work, from
results of my activities can- of work; my own contribu- start to finish; the results
not be seen in the fi nal prod- tions can be seen in the fi nal of my activities are easily
uct or service. outcome. seen in the fi nal product
or service.
3. How much variety is there in your job? That is, to what extent does the job require you
to do many different things at work, using a variety of your skills and talents?
1----------------2----------------3----------------4----------------5----------------6----------------7
Very little; the job requires Moderate variety. Very much; the job
me to do the same routine requires me to do many
things over and over again. different things, using a
number of different skills
and talents.
4. In general, how significant or important is your job? That is, are the results of your work
likely to signifi cantly affect the lives or well-being of other people?
1----------------2----------------3----------------4----------------5----------------6----------------7
Not very signifi cant; the Moderately signifi cant. Highly signifi cant; the
outcomes of my work are outcomes of my work can
not likely to have important affect other people in very
effects on other people. important ways.
5. To what extent does doing the job itself provide you with information about your work
performance? That is, does the actual work itself provide clues about how well you are
doing – aside from any “feedback” co-workers or supervisors may provide?
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111 PROMOTE JOB SATISFACTION THROUGH MENTAL CHALLENGE
1----------------2----------------3----------------4----------------5----------------6----------------7
Very little; the job is set up Moderately; sometimes doing Very much; the job is set
so I could work forever with- the job provides “feedback” up so that I get almost
out finding out how well I to me; sometimes it does not. constant feedback as I
am doing. work about how well I am
doing.
From: Hackman, J. R., and Oldham, G. R. (1980). Work Redesign. Reading, MA: Addison-Wesley.
Morgeson ( 2007 ) meta - analyzed the results of over 250 studies of work characteristic –
job outcome relationships. All five intrinsic job characteristics were strong predictors of
employee job satisfaction. Moreover, these core characteristics were generally found to be
significant predictors of other attitudinal criteria, such as organizational commitment and
work motivation, as well as behavioral, job performance outcomes. The empirical data
suggest that intrinsic job characteristics are the mostly consistently signifi cant situational
predictor of job satisfaction.
HOW TO INCREASE MENTAL CHALLENGE IN JOBS
Ever been in a car accident? If you have, you probably remember picking up the phone
to call your insurance company and, inevitably, talking to many different people, recount-
ing the details of your accident several times. It may be weeks or even months before your
claim is settled and, if you ever happen to call to inquire about the status of your claim,
you may discover that your claim is buried somewhere in the system. As a customer in
this situation, you probably feel irritated and poorly served being passed around like a
hot potato. But have you ever wondered what the implications of such a system are for
employees? When each employee specializes in processing one part of the claim, the mental
challenge afforded by the job suffers. Over and over, the same person may answer the phone
from customers, take down basic details of the accident, and then pass on the claim to some-
one else, never to see it again. Even the job of claims adjuster can be broken into segments
that are very specialized. When individuals repeatedly perform narrow and specialized tasks,
they are unlikely to see their work as very challenging or intrinsically motivating.
As an example of how to diagnose and change a work system in this situation, assume
we have administered the JDS to several customer service representatives (CSRs) and
managers of a local branch office of an insurance company. Assume the average JDS
scores for each job characteristic are as depicted in Figure 6.1 . From this figure, you can
determine where the problems are and, if one is to improve CSR attitudes, where changes
need to be made. Specifi cally, as compared to managers, CSRs report especially low levels
of skill variety, task identity, and autonomy. Under such circumstances, you would expect
the average CSR to report a low level of job satisfaction. But what can be done about
it? How can the profile of a CSR job be made to look more like that of the manager?
Before specifically addressing this question, let us consider some general ways of increas-
ing intrinsic job characteristics:
◆ Job rotation. Job rotation entails employees perform different jobs; typically, rotation
occurs once employees have mastered their present job and are no longer challenged
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112 TIMOTHY A. JUDGE AND RYAN KLINGER
High
Manager
Customer service representative
Medium
Low
Skill variety Task identity Task significance Autonomy Feedback
FIGURE 6.1 Job characteristics profi les for job of customer service representative and manager
by it. Many companies use job rotation to increase flexibility – i.e. having employees
capable of performing a wide variety of jobs allows adjustments to be made due to
absenteeism, injury, or changes in product demand. By allowing substitution, job
rotation can be particularly useful when an employer faces skill shortages (Berry,
2008 ). However, there are also substantial satisfaction benefits. Many employees
enjoy trying their hand at different jobs, and appreciate the broader perspective it
provides (such as when Southwest Airlines ticket agents may try loading bags on the
plane). Some companies even pay people for successfully rotating into new jobs; such
pay systems are referred to as “ skill - based pay. ”
◆ Job enlargement. Job enlargement, sometimes called horizontal loading, involves
expanding the number of tasks associated with a particular job. The difference
between job enlargement and job rotation may seem subtle. The difference is that
with job rotation, jobs are not really redesigned. Employees simply systematically
move from one job to another, but while they are performing a job, the nature of
the work has not changed. Job enlargement is a more fundamental intervention
because it involves actually changing the job. For example, an assembly line worker
who formerly performed one discrete operation (bolting the seat to the fl oor of
a car) may instead be part of a team that performs many phases of the assembly
operation. Another example would be workers in a grocery store who may work at
the checkout counter, stock shelves, or clean, depending on what needs to be done.
◆ Job enrichment. Job enrichment, sometimes referred to as vertical loading, involves
increasing the responsibilities of the job. Compared to job enlargement, the increase
in the variety in the work of an enriched job may be no more than of an enlarged
job, but the responsibility (and often autonomy) of the job is increased. For example,
self - managed work teams may take on responsibilities such as staffi ng, scheduling,
and performance appraisal formerly assigned to the team ’s supervisor. One example
of job enrichment occurred at the Duncan Hines angel food cake factory in Jackson,
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113 PROMOTE JOB SATISFACTION THROUGH MENTAL CHALLENGE
Tennessee. Workers who combine the ingredients for the cake mix are given letters
from customers who have had problems with the cake mix. Employees may call up
customers to help them solve their problems and, in the meantime, perhaps learn
how to make better mixes or provide clearer instructions ( Johns, 1996 ). A simi-
lar job enrichment program was undertaken in a totally different industry. Saturn
relies on enriched production work teams which are “ self - directed and empowered
with the authority, responsibility, and resources necessary to meet their day to day
assignments and goals, including producing budget, quality, housekeeping, safety
and health, maintenance, material and inventory control, training, job assignments,
repairs, scrap control, vacation approvals, absenteeism, supplies, record keep-
ing, personnel selection and hiring, work planning, and work scheduling ” (Saturn
Memorandum of Agreement, 1985 ).
Now let us return to our insurance company example. Having learned about the ways
in which intrinsic job characteristics can be increased, how could we redesign the CSR
job? Rotating CSRs through different specialties could increase skill variety. Providing
CSRs with feedback on the resolution of each claim could raise task identity. Giving
CSRs more latitude in servicing customers could increase autonomy. Though each of
these piecemeal changes may have merit, a deeper approach would be to assign CSRs
responsibility for entire claims. Although there are some aspects of the job that a CSR
may not be able to accomplish on their own, these could be referred to a claims adjuster,
or CSRs could be trained to take on some of the duties of a claims adjuster. By assigning
an employee responsibility for the entire claim, both horizontal and vertical loading are
increased. Horizontal loading is enhanced because the CSR may need to arrange a rental
car for the customer, determine whether a check has been processed, or negotiate with
another insurance company representative about payment on a claim. Vertical loading
is increased by giving the CSR discretion to make decisions about various aspects of the
claim (e.g. whether to provide a loaner car for a particular claim, prioritizing claims, etc.).
The downsides of redesigns such as this come in the form of training costs and the recog-
nition that there are some employees who do not welcome challenging work. In addition,
more mentally challenging jobs may require more intelligent employees and, subsequently,
higher compensation costs. However, research indicates that the benefits of job redesign
generally outweigh these costs (Cascio, 1991 ).
CRITICISMS AND LIMITATIONS
The Job Characteristics Model has amassed a great deal of support in the research lit-
erature. Despite the support, there have been several criticisms of the model. Two of the
most important concerns are reviewed below.
Measurement of job characteristics
The Job Characteristics Model assumes that job characteristics cause job satisfaction. It
is important to remember that the measures of intrinsic job characteristics typically are
perceptual. According to some researchers, perceptual measures are susceptible to biasing
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114 TIMOTHY A. JUDGE AND RYAN KLINGER
infl uences such as mood. If employees ’ mood at the time of rating their job characteristics
and job satisfaction affects both ratings, the correlation between perceptions of job char-
acteristics and job satisfaction would be inflated (i.e. the real relationship would be lower
than it appears). Furthermore, there are concerns that the relationship is not solely from
job characteristics to job satisfaction; job satisfaction may also (or instead) cause percep-
tions of job characteristics. Although some research has supported these criticisms, other
research has shown that when these limitations are remedied (e.g. using objective meas-
ures of job characteristics), a relationship between job characteristics and job satisfaction
still exists (Glick, Jenkins, and Gupta, 1986 ; Judge, Bono, and Locke, 2000 ). Thus, while
these criticisms are important to keep in mind, they do not undermine the model.
Motivational vs. mechanistic work design approaches
Motivational approaches to work design, grounded in industrial and organizational psy-
chology and exemplified by the Job Characteristics Model, aim to capitalize on the moti-
vational and attitudinal benefits that accrue from a challenged and psychologically fulfi lled
workforce. In contrast, mechanistic approaches, as advocated by classical industrial engin-
eers, emphasize increased efficiency through factors such as work skill simplifi cation and
task specialization. The mechanistic approach would seem to conflict with job design
endorsed by the JCM: the former emphasizes efficiency in production (high output levels,
low error rates, etc.), the latter emphasizes the advantages of a satisfied and motivated
workforce (Campion, 1988 ; Edwards, Scully, and Brtek, 2000 ).
Subsequent research by Campion, Morgeson, and colleagues (Campion, Mumford,
Morgeson, and Nahrgang, 2005 ; Morgeson and Campion, 2002 ), however, suggests that
steps can be taken to minimize these efficiency - satisfaction tradeoffs. For instance, utilizing a
level - separation approach, one might design organizational structures based on the mechanistic
principles of standardization and simplification and still implement the core motivational
characteristics within individual jobs. Thus, “ basic efficiencies are built into the flow of the
work, yet individual jobs are satisfying ” (Campion et al., 2005 , p. 371). Or, a sequential approach
could be implemented in which both approaches are applied in succession. For instance,
after tasks are specialized, management may take steps to increase autonomy and feedback.
MODERATORS
Employees with low Growth Need Strength
In considering the recommendation that organizations should increase the mental chal-
lenge of jobs, one might wonder whether everyone seeks mental challenge in their work.
Indeed, the relationship between intrinsic job characteristics and job satisfaction depends
on employees ’ Growth Need Strength (GNS). Growth Need Strength (GNS) is employees ’
desire for personal development, especially as it applies to work. High GNS employees want
their jobs to contribute to their personal growth, and derive satisfaction from perform-
ing challenging and personally rewarding activities. One of the ways GNS is measured
is by asking employees, with a survey, to choose between one job that is high on extrinsic
rewards (such as pay) and one that is high on intrinsic rewards. For example, one item asks
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115 PROMOTE JOB SATISFACTION THROUGH MENTAL CHALLENGE
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Average correlation.57
.32Average correlation
Low GNSHigh GNS
FIGURE 6.2 Studies of the correlation between intrinsic job characteristics and job satisfaction for
individuals with high (High GNS) and low (Low GNS) Growth Need Strength
the employee to choose between “A job where the pay is very good ” and “A job where
there is considerable opportunity to be creative and innovative.” Individuals who strongly
prefer the latter job are likely to be high on GNS – all else equal, high GNS people prefer
jobs that are challenging and interesting, which allow them to work autonomously and
use a number of skills, over jobs that are otherwise rewarding (high pay, good supervision,
pleasant co - workers, etc.). According to the model, intrinsic job characteristics are espe-
cially satisfying for individuals who score high on GNS. In fact, research supports this
aspect of the theory. As is shown in Figure 6.2 , across the 10 studies that have investigated
the role of GNS in the relationship between intrinsic job characteristics and job satisfac-
tion, the relationship tends to be stronger for employees with high GNS (average r .57) than
for those with low GNS (average r .32). However, as the figure shows, it is important
to note that intrinsic job characteristics are related to job satisfaction even for those who
score low on GNS (Frye, 1996 ).
Employees who value other job attributes
Thus far we have established that job satisfaction is best promoted through intrinsically
challenging work because most employees value the work itself more than other job
attributes. One exception to this principle is that employees who do not care about intrinsic
job characteristics ( low GNS) will be less satisfied by challenging work. A more generalized
means of considering this exception is through values. It may not be that only employ-
ees with low GNS will respond less favorably to intrinsic job characteristics, the exception
would also apply to employees who value other job or organizational attributes. Following
his definition of values as that which one desires or considers important, Locke ( 1976 )
argued that individuals ’ values would determine what satisfied them on the job. Only the
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116 TIMOTHY A. JUDGE AND RYAN KLINGER
unfulfilled job values that were important to the individual would be dissatisfying. Thus,
value - percept theory predicts that discrepancies between what is desired and received
are dissatisfying only if the job facet is important to the individual. Because as a general
rule individuals value work more than other job attributes, Locke ’s argument is consistent
with the general principle described in this chapter. Thus, if intrinsic job characteristics were
the most important job facet to most individuals, then Locke ’s theory would predict that
increasing the level of intrinsic job characteristics (thus reducing the have- want discrep-
ancy with respect to intrinsic characteristics) would be the most effective means of raising
employees ’ job satisfaction. However, it must be recognized that when an employee does
not value challenging work, other values must be fulfilled to satisfy the person.
Personality
Implicit in Locke ’ s definition of job satisfaction is the importance of both feeling and
thinking. People ’s evaluation of their jobs is a process of rational thought (How is my pay
relative to my peers? Is my work as challenging as I would like?), but it is also infl uenced
by people ’s dispositional outlook. Research has shown that unhappy children become dis-
satisfied workers later in life (Staw, Bell, and Clausen, 1986 ). There is even evidence that
job satisfaction is partly heritable (see Arvey, Carter, and Buerkley, 1991 ). Thus, part of
the reason we like or dislike our jobs has nothing to do with the jobs. Rather, it is due
to our dispositional outlook that derives from our genes and early childhood experiences.
Judge, Locke, Durham, and Kluger ( 1998 ) have found that the key dispositional factor
leading to job satisfaction is core self - evaluations – if we have a positive self - regard, we are
likely to see our jobs positively and undertake jobs that are challenging. Evidence indicates
that core self - evaluations are related to job satisfaction through various processes, includ-
ing that those with positive core self - evaluations both attain more challenging work, and
perceive their work as more challenging and interesting ( Judge et al., 2000 ). Individuals
with positive core self - evaluations are also more likely to work toward goals for reasons
that are consistent with their values ( Judge, Bono, Erez, and Locke, 2005 ).
Dispositions are important in understanding job satisfaction. To a large extent, they are
what cause two people with the same job to be differentially satisfied by it. The main prac-
tical implication of the dispositional source of job satisfaction is that if employers wish to
raise satisfaction levels of their workforce, they need to select applicants with positive dis-
positions. However, the dispositional source of job satisfaction does not invalidate the gen-
eral principle presented in this chapter; it merely explains why the general principle does
not account for all the variation in job satisfaction. Over and above dispositional factors
and mental challenge, people also value pay and being treated fairly.
Other moderators
In addition to the boundary conditions mentioned above, management wishing to capitalize
on the potential benefits of mentally challenging work should consider several moderators
that impact the success of job redesign. For instance, any time new tasks or skill require-
ments are added to a job, one should consider issues such as:
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117 PROMOTE JOB SATISFACTION THROUGH MENTAL CHALLENGE
◆
Do the employees possess excess cognitive capacity to handle the additional job
demands (Phillips, 2008 )? If not, then increasing the job demands might overload
the employees.
◆
Do the employees believe they can successfully perform the new job? If not, the
organization may consider techniques designed to increase employee self - effi cacy
(see Chapter 10 , this volume) before or during the implementation of the new job.
◆
Are the employees intrinsically interested in the new demands or tasks? Employee
satisfaction is unlikely to increase when the challenge comes from tasks or jobs
which are not personally interesting, e.g. studying the law is mentally challenging
but many people have no interest at all in it (Holland, 1997 ).
CASE EXAMPLES
Job redesign at Volvo ’s manufacturing plants
In the early 1990s, the Volvo corporation was experiencing high levels of employee absen-
teeism and turnover in their manufacturing facilities due to dissatisfaction with the “ mass
production environments dominated by . . . Tayloristic work practices ” (Wallace, 2008 ,
p. 113). In manufacturing plants across Sweden and the UK, Volvo attempted to combat
these issues by experimenting with alternatives to the traditional assembly line - style manu-
facturing work design. As one production manager put it, a change was needed in order
to “ give all employees the chance to develop as a whole person, to take more responsibility
for their work environment, to have more space to decide on what work they will do and
to have more control on their working environment ” (Wallace, 2008 , p. 115).
Following the job redesign initiative, rather than being assigned one particular activ-
ity along an assembly line, employees were grouped into autonomous work teams and
given responsibility for the overall production of the vehicles ( high task identity ). Employees
were afforded the opportunity to utilize a variety of skills as they rotated job tasks, from
foundry work to machine maintenance to painting and detailing, etc., depending on situ-
ational demands or personal preferences (Thompson and Wallace, 1996 ). For instance, at
the Tuve plant, workers were allowed to rotate jobs as frequently as once ever four hours
(Thompson and Wallace, 1996 ), with no approval from upper management necessary ( high
autonomy). Each team was also responsible for inspecting their fi nished products, provid-
ing members with feedback concerning the quality of their work. These changes resulted
in significant perceptual adjustments as employees no longer felt that they were merely
“ machine operators ” but rather “ car manufacturers ” (increased task significance).
Volvo ’s commitment to making automobile assembly a more intrinsically motivat-
ing occupation resulted in several positive work outcomes. In its Kalmar plant, turnover
dropped from 24% to 5% following reorganization ( Jones, 1991 ). Furthermore, in the Volvo
Truck Corporation ( VTC) plants, absenteeism fell from 15% to 12% and machine tool
efficiency increased by 40 – 90% in some units ( Thompson and Wallace, 1996 ). The time
required to manufacture automobiles was reduced by 2 – 4 hours per vehicle and overall pro-
duction costs decreased as well ( Wallace, 2008 ).
Despite the overwhelmingly positive outcomes experienced across several Volvo plants,
by 2004, nearly all had been reconfigured to more similarly reflect previous assembly line
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118 TIMOTHY A. JUDGE AND RYAN KLINGER
structures. Critics postulated that this move was “ not totally based on logical overarching
decisions or rational decision management ” (Engstrom, Blomquist, and Holmstrom, 2004 ,
p. 836), but rather reflected three shortcomings. First, Volvo ’s desire to seek more inter-
national ventures put pressure on the corporation to adopt the lean processing approach that
had become the dominant paradigm in the automobile industry (Wallace, 2008 ; Womack,
Jones, and Roos, 1991 ). Second, as pointed out by Wagner (see Chapter 24 , this volume),
efficient work techniques and other valuable information residing within the autonomous
work teams were not being successfully distributed across the organization, thus hinder-
ing Volvo ’s ability to capitalize on team - level innovations and remain competitive in a glo-
bal industry. Finally, although Volvo committed heavily in the technological aspects of the
job redesign, experts point out that its commitment to the social/managerial aspects were
inadequate (Engstrom et al., 2004 ). Human resource functions such as employee selection,
training, compensation, and performance evaluation were never properly redesigned to
reflect the changed nature of the work. For instance, many employees lacked the prerequi-
site skills to accomplish their new tasks, resulting in considerable variation in the effec-
tiveness of the autonomous work teams. In sum, altering the nature of work to increase
intrinsic satisfaction is one tool organizations can use to influence employee attitudes and
behaviors. However, as the Volvo case illustrates, job redesign must be considered in terms
of internal (e.g. human resource practices) and external (e.g. global competition) factors to
capitalize on the potential benefits of mentally challenging work.
Tom Warner
Tom Warner owns a plumbing, heating, and air- conditioning business in the Annapolis,
Maryland, area. Warner had observed over the past few years that his business had fallen
off somewhat in his primary market – commercial property - management firms. In order
to cut costs, these firms were hiring handymen to do work in - house. Thus, Warner decided to
pursue the residential market. But how could his business, with more than 250 people,
compete against little mom - and - pop operators who built personal relationships with many
clients? Warner ’s answer was to expand the jobs of his plumbers, electricians, and technicians
so that each operated like they owned their own business.
Warner divided the Annapolis territory into smaller territories of approximately 10,000
households. Each of his non - staff employees was given a territory. The employees were
trained in how to run their territory as if it were their own business. They learned sales
techniques, budgeting, negotiating, cost estimating, and how to handle customer complaints.
Warner ’s vision was to run his business using a staff of technically superb, friendly, and
ambitious mechanics who operate like small - town tradespeople despite the big - city reality.
The redesign of mechanics ’ jobs has been quite successful. Although turnover initially
increased (perhaps because low GNS employees did not like the redesigned jobs), the
remaining employees have developed a strong sense of pride and ownership in their ter-
ritory. The average mechanic puts in 63 hours a week. They not only fix pipes and repair
heaters, they generate referrals, schedule their own work, do their own estimates, handle
their own equipment, develop their own advertising campaigns, and collect their own
receivables. Warner provides training, trucks, tools, phones, pagers, dispatchers, and an all -
night answering service. He also performs such chores as payroll and taxes. His mechanics
are then free to run their businesses the best way they see fi t.
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119PROMOTE JOB SATISFACTION THROUGH MENTAL CHALLENGE
CONCLUSION
Job satisfaction matters. Employees who are satisfied with their jobs tend to perform
better, withdraw less, and lead happier and healthier lives. Organizations whose
employees are satisfied with their jobs are more likely to be productive and profi t-
able. The single most effective way organizations can achieve a satisfi ed workforce is
to provide their employees with mentally challenging work.
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Arvey , R. D., Carter , G. W. , and Buerkley , D. K. ( 1991 ). Job satisfaction: Dispositional and
situational infl uences. International Review of Industrial and Organizational Psychology, 6 ,
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EXERCISES
Identifying factors related to job satisfaction
The National Opinion Research Center at the University of Chicago surveyed over
50,000 Americans to determine which occupations scored the highest and lowest in terms
of overall job satisfaction. Whereas fi refighters and physical therapists were generally very
satisfi ed employees, roofers and cashiers were generally unsatisfi ed with their jobs.
Use the Department of Labor ’s Occupational Information Network (O * NET; http://
online.onetcenter.org ) to compare job descriptions and relevant knowledge, skills, abilities,
and other characteristics of: (a) fi refighters, (b) physical therapists, (c) roofers, and (d) cash-
iers. In terms of the core characteristics of the Job Characteristics Model, which occupa-
tions inherently have high levels of task identity, task significance, skill variety, autonomy,
and feedback? Judging from these four jobs, do higher values of JCM core characteristics
appear to correlate with higher job satisfaction? What other factors might impact the sat-
isfaction scores?
Redesigning jobs to increase mental challenge
Identify three separate jobs. These can be current jobs, jobs you have had in the past,
and/or jobs that you are familiar with. Use the Job Diagnostic Survey (Table 6.1 ) to assess
each job ’s motivating potential. Formulate a plan to redesign the jobs that will increase
their motivating potential. While working, think about the following issues:
1. How will redesigning your jobs impact other jobs within the organization?
2. What Human Resource (HR) functions (recruitment, selection, training, perform-
ance appraisal, compensation, etc.) will be impacted by the redesigned jobs? What
can you do to realign HR functions with your new jobs?
3. Are some jobs easier to redesign than others? What factors make a job easy or hard
to redesign?
4. Is it easier to increase some core JCM characteristics than others? What core JCM
characteristics are easy or hard to adjust?
5. What are the costs associated with your job redesign plans? Given these costs, do
you think an organization would benefi t from implementing your changes?
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c07.indd 123 6/17/09 2:40:16 PM
7
Control Voluntary Turnover by
Understanding its Causes
MARION B. EBERLY, BROOKS C. HOLTOM, THOMAS W. LEE,
AND TERENCE R. MITCHELL
*
It ’s no secret, of course, that many people quit their jobs. Whether voluntary employee turn-
over is a problem, however, “ depends. ” Sometimes, an individual ’s volitional quitting can be
a major problem. In certain parts of the food and beverage industry, for example, turnover is
routinely well over 100% annually, and many managers must often worry about simply hav-
ing enough employees to keep their operations running. In segments of the software indus-
try, moreover, losing a single key employee can not only decrease the likelihood of a project ’ s
success, but it can also reduce investors ’ confidence in the firm and thereby dramatically
lower that firm’s stock price. Sometimes, employee turnover can be far less of a problem,
and in some cases it is even desired. If employees can be readily hired, trained, and inte-
grated into the company ’s operations and culture, quitting might only be a minor nuisance.
Relatedly, turnover may even be desirable because it serves as an immediate constraint on
labor costs. Plus, the voluntary exit of a poor performer may be a welcome opportu nity
to strengthen the organization’s human capital through selection. Thus, employee turn over
is not necessarily bad or good. Instead, it is an ongoing organizational issue that needs to
be managed. Thus, understanding how employees decide to leave is essential to gaining
control.
Empirical research has established that there are four complementary approaches to under-
standing the turnover process. Two of these approaches focus on who quits and how they
quit. In the first approach, leaving is traditionally described through a process initiated by
an individual ’s feelings and beliefs. More specifically, job dissatisfaction is theorized to initi-
ate a variety of job - search behaviors and corresponding comparative evaluations on the
identified employment opportunities that, in turn, set the stage for an employee ’s quitting.
*
All four authors contributed equally to this chapter and are listed in alphabetical order.
c07.indd 124 6/17/09 2:40:16 PM
124 MARION B. EBERLY, BROOKS C. HOLTOM, THOMAS W. LEE, AND TERENCE R. MITCHELL
The second approach is called the “ unfolding model of voluntary turnover.” In contrast to
traditional ideas, the unfolding model (a) describes multiple quitting processes, (b) includes
non - cognitive and external - to - the - person factors, and (c) explains how relative job satisfaction
can prompt an employee ’s departure. Rather than focusing on why people leave , the third
approach examines the reasons why people stay. The broad influences that determine an
employee ’s choice to remain within a job are represented by the job embeddedness concept.
Job embeddedness captures the extent to which the employee is tied to the job, consider-
ing both on - and off - the - job factors. Finally, in the fourth approach, understanding focuses
on the company ’s definition of the circumstances surrounding a person’s leaving. Viewed
from the manager ’s perspective, the questions are whether an employee ’s quitting is func-
tional or dysfunctional as well as whether it is avoidable or unavoidable.
Based on these four approaches, we clarify in this chapter how turnover might best be
understood and managed. First, we describe each of these four approaches and their cor-
roborating evidence. Second, we summarize this body of evidence to identify the signals that
management should monitor in order to predict future employee quitting. Third, we explain
what to do after observing the signals of the enhanced likelihood of turnover. Fourth, we
highlight notable exceptions. That is, we suggest conditions under which our recommended
signs and actions may be more or less meaningful.
APPROACH 1: WHAT TRADITIONAL THEORIES ABOUT
T
URNOVER TELL US
Monitor job attitudes and withdrawal cognitions
The theorized linkages . Based on the evidence to date, managers have good reason to expect
links between job (dis)satisfaction and employee turnover. (See Hom and Griffeth ( 1995 ) for
an excellent, comprehensive academic treatment of the major psychological theories of turn-
over using this perspective.) First, the lower the level of an employee ’s job satisfaction, the
lower will be the level of his or her organizational commitment. Second, the lower these two
job attitudes are, the stronger will be the initial thoughts, feelings, and expected positive out-
comes of quitting. Third, according to this traditional approach, these thoughts, feelings, and
expected outcomes lead most people to search for another job. The job opportunities found
during this job search are then evaluated. Finally, actual quitting occurs when a “ better ” job
opportunity is found. We hasten to note that “ better ” has rarely been fully defi ned. Most
often, improved economic outcomes are implied (e.g. compensation and fi nancial opportunities)
but seldom explicitly stated.
The evidence . Perhaps equally enlightening as the traditional dissatisfaction - induced leaving
processes themselves, the statistical findings provide compelling reasons for a manager to
expect the following stable and consistent relationships. The statistics that are provided in
parentheses below are: (a) averaged across multiple studies; (b) weighted by large sample
sizes; and (c) statistically significant. Furthermore, these values are taken from reports that
quantitatively summarize the data from numerous empirical studies, by Griffeth, Hom, and
Gaertner ( 2000 ), Meyer, Stanley, Herscovitch, and Topolnytsky ( 2002 ), and Spector ( 1997 ).
Our description of a statistic ’s size (e.g. large, moderate, or small) derives from the common
standards in the social sciences.
c07.indd 125 6/17/09 2:40:16 PM
125 CONTROL VOLUNTARY TURNOVER BY UNDERSTANDING ITS CAUSES
First, overall job satisfaction strongly correlates with affective organizational commitment
(r .65), and the intentions to search for another job (r .60) and intentions to leave
(r .46). More specifically, lower scores on job attitude measures are consistently
associated with more thoughts of leaving and job - search activities. Second, job satisfaction
(r .19), organizational commitment (r .23), thoughts of quitting (r .24), and
intentions to search (r .29) and intentions to leave (r .38) correlate moderately well
with actual turnover behavior. In other words, these variables are consistently associated with
employee withdrawal. Third, until people quit, less satisfied employees are absent slightly
more often (r ’ s between .10 and .l5), somewhat less helpful to co - workers (r ’ s between .22
and .26), and perform their jobs more poorly (r .25). Similarly, less affectively committed
employees also perform fewer citizenship behaviors (r .32), perform their jobs more poorly
(r .17), and have higher turnover intentions (r .51). Thus, employees with poor job
attitudes often exhibit multiple negative behaviors and can be difficult to manage.
What to monitor first: job attitudes. Every traditional theory on employee turnover includes job
dissatisfaction as either the primary starting point or as an early stage in the turnover process.
Moreover, the evidence indicates consistent and large correlations (cited above) between job
satisfaction and the intermediate variables (e.g. organizational commitment, intention to
search or to leave) before actual employee turnover occurs. In turn, the evidence reveals
consistent, moderate - sized, and predictive over time correlations between the intermediate variables
and actual quitting. When considered together, job satisfaction and organizational commitment
should be monitored as clear and compelling indicators of future employees ’ quitting.
Merely analyzing employee job satisfaction and organizational commitment in a static
manner is not enough. It is imperative to examine attitude trends over time. Employees
may experience significant decreases in attitudes over time and these changes may lead to
an increase in search and quit intentions and actual turnover. For example, employees
who appear to be satisfied with their jobs may decide to quit because some aspect of their
jobs changed over the past few weeks and made them be less satisfied than before. A static
approach to monitoring job attitudes would miss these nuances, and managers might
therefore inaccurately assume that these employees will most likely not leave. Eventual leavers
will likely experience a decline in job satisfaction and organizational commitment over time,
therefore rendering a dynamic monitoring of these attitudes essential to managers (Bentein,
Vandenberg, Vandenberghe, and Stinglhamber, 2005 ; Kammeyer- Mueller, Wanberg, Glomb,
and Ahlburg, 2005 ).
What to monitor second: global withdrawal cognitions. These traditional approaches most often
conceptualize factors such as thoughts of quitting, expected utility of job search, cost of quit-
ting, intention to search, evaluation of alternative jobs, comparisons between current and
alternative jobs, and intention to leave as separate entities. Correspondingly, organiz ational
behavior researchers have sought to measure and study these variables separately. An
enduring problem, however, is that these intermediate variables (between job satisfaction
and turnover) are difficult to separate accurately (e.g. using various statistical methods). As a
result, several turnover scholars have sought to simplify the meaning of these “ intermediate
steps. ” More specifically, these numerous factors have been reconceptualized and empiri-
cally measured as a global and broader- based variable labeled “ withdrawal cognitions. ”
c07.indd 126 6/17/09 2:40:17 PM
126 MARION B. EBERLY, BROOKS C. HOLTOM, THOMAS W. LEE, AND TERENCE R. MITCHELL
When measured directly, global withdrawal cognitions consistently correlate with actual
turnover (r .30). Thus, it is advisable to monitor employees ’ global withdrawal cognitions.
Similar to job attitudes, managers will benefit from monitoring changes in withdrawal
cognitions over time through surveys and questionnaires. Eventual leavers are likely to
increase their withdrawal behaviors and cognitions under this traditional approach while
stayers likely do not change (Kammeyer- Mueller et al., 2005 ). In short, the “ evidence ”
informs us to dynamically monitor job attitudes and global withdrawal cognitions as leading
indicators of potential turnover.
CASE EXAMPLE
According to hotel survey firm Market Metrix, on average, US hotels will replace two thirds
of their workers every year. The annual costs of recruiting, selecting and training these
replacements as well as the associated productivity losses range from $ 100,000 at a small
property to more than $ 1,000,000 at a large hotel. In this competitive industry where labor
costs account for nearly one half of total operating costs, expenses incurred because of high
staff turnover can mean the difference between making a profit or loss in any given year.
Given this context, consider the following example.
In just a few years, Joie de Vivre Hospitality has been able to drive staff turnover at the
Hotel Carlton (San Francisco, California) from more than 50% a year to below 10% a year
(Dvorak, 2007 ). While pay and benefits are largely unchanged, simple things that make
a difference in morale have changed. The former management company at the hotel did
not like to replace aging vacuums despite staff complaints. When Joie de Vivre took over
in 2003, the new manager bought each of the 15 housekeepers a new vacuum – and he
replaces them annually. A Hotel Carlton employee mentions this gesture as one of many
that “ seems to show that this company cares about us more.” Other low - cost, high - impact
changes include English as a second language and Microsoft Excel courses as well as regular
dinners for employees and their bosses to communicate informally.
APPROACH 2: WHAT THE UNFOLDING MODEL OF
T
URNOVER TELLS US
Monitor shocks and paths as well as job attitudes
and global withdrawal cognitions
The overall model. By design, the unfolding model offers a broader perspective than the
traditional theories of turnover. (See Lee and Mitchell ( 1994 ) for a detailed description
of this model.) Based on the evolving evidence, managers should have confidence that the
unfolding model broadly and accurately describes the leaving process. More specifi cally,
the unfolding model informs us about four basic patterns of thoughts and actions (or
psychological “ paths ” ) for leaving organizations. In one particular pattern, which is labeled
“ path 4, ” leaving is seen as quite similar to the traditional ideas of turnover described
previously. Job dissatisfaction prompts thoughts of leaving that lead, in turn, to job search,
evaluation of alternatives, and eventual departure from the job. Thus, much of the
evidence on the traditional ideas about turnover also pertains to path 4 leaving. From an
c07.indd 127 6/17/09 2:40:17 PM
127 CONTROL VOLUNTARY TURNOVER BY UNDERSTANDING ITS CAUSES
applied perspective, both traditional and path 4 approaches inform the manager to monitor
employees ’ negative or declining job attitudes.
In paths 1, 2, and 3, a fundamentally different pattern is asserted. In contrast to
dissatisfaction - induced quitting, the leaving process begins with a shock – an external - to -
the - person event that causes him to think about leaving. Shocks serve to shake people out
of their daily, habitual, ongoing patterns and routines. Although all shocks are mediated by
an individual ’s perceptual processes, their jarring nature renders them easily identifi able,
describable, and understandable by the employee and manager. Thus, shocks are a
conceptual tool that keeps monitoring and observations firmly grounded on work behaviors
and the employee ’s immediate situation. In our research, for example, people report that
shocks can be: (a) positive (e.g. acceptance into graduate school) or negative (e.g. a nurse
being forced into a life - threatening emergency surgery for which she was unprepared);
(b) expected (e.g. a spouse ’s retirement) or unexpected (e.g. being denied a six - month leave
of absence); and (c) organization related (e.g. the hospital shifts from individual - based to
team - based nursing) or personal (e.g. becoming pregnant with one ’s third child). As a result,
shocks augment job attitudes and global withdrawal cognitions as key antecedent signals to
subsequent employee turnover and are easily identifiable by employees.
The unfolding model offers a unique lens through which to examine turnover, because
it focuses on the reasons why people leave, and oftentimes these reasons are unrelated to
attitudes such as job satisfaction and organizational commitment. Thus, exploring turnover
reasons provides researchers and managers with a more complete and accurate picture of
why employees leave, which in turn facilitates turnover management and control. Maertz
and Griffeth ( 2004 ) developed a typology of turnover motives and argued that these motives
capture the most proximal causes of turnover cognitions and therefore are the best predictors
of actual turnover behavior. Combining these eight motives with the unfolding model,
Maertz and Campion ( 2004 ) show that the reasons systematically relate to specifi c decision
paths. Exploring turnover reasons therefore can tell us which paths employees will choose.
Monitor for specific paths. Whereas monitoring for job attitudes, global withdrawal cognitions,
and shocks is fairly straightforward, determining which specific path employees may take
can be more complicated; but such monitoring offers the manager greater understanding
of turnover. In path 1, a shock triggers a person to use a pre - existing action plan (or what
social psychologists call a script). Minimal mental deliberations occur. A person leaves with out
considering his or her current attachment to the organization (e.g. organizational commit-
ment) and without considering his or her current job alternatives. Unlike traditional ideas and
path 4, job satisfaction is essentially irrelevant. In path 1, a satisfied person can appear to leave
abruptly but is in fact following a pre - planned course of action. For example, an interviewee
reported the following: “ It was very simple; I am going to graduate school . . . It had noth-
ing to do with my job. It had everything to do with my personal situation . . . Very quickly,
as soon as I got the letter that I was accepted into graduate school, the decision was made ”
(Lee, Mitchell, Wise, and Fireman, 1996 , p. 17). Note that path 1 involves a shock (e.g. the
acceptance letter), script (e.g. return to graduate school), no job search, and no evaluation of
alternatives.
In path 2, a shock prompts a person to reconsider his or her basic attachment to the
organization because of violations to one ’s basic values, personal or professional goals,
and/or plans for goal attainment ( “ images ” ). After completing these mental deliberations,
c07.indd 128 6/17/09 2:40:17 PM
128 MARION B. EBERLY, BROOKS C. HOLTOM, THOMAS W. LEE, AND TERENCE R. MITCHELL
a person leaves the organization without a search for work alternatives. Unlike traditional
ideas and path 4 but like path 1, job satisfaction is also largely irrelevant. In path 2, a
satisfied person can leave abruptly because she is reacting to the shock itself. For example,
an employee recently left a bank where we were conducting research. In her words, she
told us the following:
I was working and minding my own business. Then, a new person was hired and she was
pretty vocal. One day she was complaining about her pay. While that made me mad,
what was worse is that I had been at the bank for over a year and she was making a dol-
lar an hour more than me while doing the same job. I quit the next day.
Note that path 2 involves a shock (e.g. learning about the pay of a fellow employee), no
script, violations (e.g. images of personal and professional goal attainment), no job search,
and no evaluation of alternatives.
In path 3, a shock provokes a person to consider whether an attachment could form with
another organization because of violations to one ’s basic values, personal or professional
goals, and/or plans for goal attainment. The mental deliberations due to the shock and
violations lead an individual to search for another job and to evaluate specifi c alternatives
and one ’s current job. Unlike traditional ideas and paths 1 and 2, a reasonably job - satisfi ed
person can leave for a more satisfying job. In path 3, job dissatisfaction may or may not be
present. Previously, we reported the following example of path 3 leaving:
Sammy Lew (a fictitious name) was a forty - five year old former electrical engineer who
had worked for a major military - defense company. [Mr. Lew] . . . had worked for the same
fi rm since graduation twenty - three years earlier. For the last ten years, Mr. Lew supervised
a group of twelve engineers. When asked why he left his former company to become a
real estate developer, Mr. Lew said that . . . it was the departure from the firm of another
work group member. That departure left Mr. Lew as the work group ’s oldest and clearly
most out - of - date engineer. [He realized that] he had minimal advancement prospects and
that “ it was time to move on. ” As such, he evaluated his interests, aspirations, and available
opportunities. Although he had no particular connection to his new profession, real estate
development appeared, on balance, his best choice. He quit the defense company upon
finding an acceptable job in real estate. (Lee and Maurer, 1997 , p. 249)
Note that path 3 involves a shock (e.g. co - worker ’s quitting), no script, violations (e.g.
images of professional goal attainment), job search (e.g. finding real - estate work), and
evaluation of alternatives (e.g. in comparison to his interests, aspirations, and available
alternatives).
The evidence
ACCURATE CLASSIFICATIONS. A fundamental test of the unfolding model is whether its
four paths can accurately describe employees ’ actual leaving. In a set of initial studies, Lee
et al. ( 1996 ) and Lee, Mitchell, Holtom, McDaniel, and Hill ( 1999 ) reported that 33 of
44 nurses (75%) and 212 of 229 former accountants from Big 6 public accounting fi rms
(93%) could be accurately classified into paths 1 – 4. In independent tests of the model, 86% of
public accountants (Donnelly and Quinn, 2006 ) and 77% of nurses were successfully clas-
sified (Morrell, Loan - Clarke, Arnold, and Wilkinson, in press). Holtom, Mitchell, Lee, and
Inderrieden ( 2005 ) illustrated that precipitating events, or shocks, more often are the im mediate
cause of turnover than job dissatisfaction. Specifi cally, across 1200 “ leavers” from a variety
c07.indd 129 6/17/09 2:40:17 PM
129 CONTROL VOLUNTARY TURNOVER BY UNDERSTANDING ITS CAUSES
of industries, 60% reported that a shock precipitated their turnover, of which 59% were
unexpected, 40% were personal, and 64% were positive. Similarly, Morrell, Loan - Clarke,
and Wilkinson ( 2004 ) reported that 44.3% of the nurses in their sample considered
a shock their primary reason for leaving while 43.8% of nurses did so in another study
(Morrell, 2005 ).
PAT H SPEED. In addition to accurate classifications, a second testable attribute of the unfold-
ing model involves the speed with which the four paths unfold. More specifically, paths vary
by their levels of mental deliberation. For example, extensive evaluation of alternatives
should take more time than doing no or minimal evaluations. Furthermore, paths differ by
whether their basic features are readily available for mental deliberation. If job search is
required, for instance, information about alternative employment is less readily available than
if no job search is involved. Thus, the path speed should vary systematically. Among nurses,
Lee et al. ( 1996 ) reported that the durations of paths 1 and 2 were significantly shorter than
those of path 4. Among accountants, Lee et al. ( 1999 ) reported shorter durations for paths
1 and 2 than for 3 and 4, and a shorter duration for path 3 than for path 4.
SHOCK CHARACTERISTICS. In their sample of 44 nurses, Lee et al. ( 1996 ) reported that:
(a) path 1 was significantly associated with expected and personal shocks (e.g. your spouse
relocates); (b) path 2 was significantly associated with organizational and negative shocks
(e.g. you are passed over for promotion); and (c) path 3 was significantly associated with
organizational shocks (e.g. you receive a competitive job offer). With the sample of 229
former Big 6 accountants, Lee et al. ( 1999 ) replicated two of the earlier fi ndings. In par-
ticular, path 1 positively associated with personal shocks and path 3 positively associated
with organizational shocks. When taken together, these two significant associations may
be robust across industries, occupations, and gender. Key findings of the Morrell et al.
( 2004 ) study indicate that: (1) shocks that are expected are more likely to be positive, per-
sonal, and lead to unavoidable leaving, (2) shocks that are negative are more likely to be
work related, associated with dissatisfaction, affect others, and lead to avoidable leaving,
(3) shocks that are more work related are less potent, associated with dissatisfaction and
search for alternatives, and lead to avoidable leaving, and (4) shocks tend to cluster into
work and non - work domains. In another study, Morrell ( 2005 ) reported three distinct clus-
ters of leavers. Cluster 1 (n 103) leavers had a work- related shock that was unexpected,
negative, and affected other workers. Cluster 2 (n 50) leavers had a personal shock that
was expected, positive and private. Cluster 3 (n 196) leavers had no shock and followed
a more traditional dissatisfaction - induced process.
In sum, monitoring for shocks is not enough. Managers must also analyze a shock ’ s content.
Different types of shocks will require different interventions. Rich information about shocks
can help a manager decide how quickly to act (e.g. in paths 1 or 2) and what factors might
inhibit leaving. In comparison to the traditional approach, the unfolding model identifi es
additional considerations and adds richness to our understanding of the turnover process.
CASE EXAMPLE
As the following example illustrates, not all turnover is job dissatisfaction induced. Indeed,
we have seen many path 1 quits in the news. One involves Nirav Tolia, 27, who left Yahoo!
c07.indd 130 6/17/09 2:40:18 PM
130 MARION B. EBERLY, BROOKS C. HOLTOM, THOMAS W. LEE, AND TERENCE R. MITCHELL
as a senior manager of its e - commerce marketing and $ 10 million in unvested options.
The reason he left: upon hearing a “ really interesting start - up idea from a friend ” (the
shock), he decided in only one day ’s time to pursue his dream (a script) of a net start - up
e - commerce company. Joining Tolia, Ramanathan Guha, 34, left America Online as one
of its senior ranking engineers and $ 4 million in unvested options also to pursue this shared
dream (Bronson, 1999 ). In short, managers need to be prepared for the possibility that some
turnover will be precipitated very quickly. Hence, potential responses need to be considered
in advance for a variety of possible scenarios – especially those involving key employees.
APPROACH 3: WHAT A FOCUS ON STAYING
R
ATHER THAN LEAVING CAN TELL US
Monitor the reasons for staying in addition
to the reasons for leaving
The concept of job embeddedness. To avoid voluntary turnover, it is at first intuitive for
managers to identify the reasons why employees are leaving and to attempt to eliminate or
minimize the impact of those reasons. The first two approaches to turnover have taken this
perspective. In contrast, a more recent approach focuses on why employees are staying and
what might prevent them from leaving. The concept of job embeddedness is focused on
the broad array of factors that influence a person’s staying in a job. Mitchell, Holtom, Lee,
Sablynski, and Erez ( 2001 ) identified three ways an employee might be embedded within
an organization: links, fit, and sacrifi ce. (Sacrifice refers here to loss of a value or values,
not necessarily to sacrifice to others as in the case of altruism.) Links refer to employees ’
formal and informal connections to other individuals or institutions (e.g. friendship ties to
co - workers). Fit refers to the extent to which employees ’ jobs and communities are compat-
i ble with their personal values, goals, and plans (e.g. congruence with organizational culture,
satisfaction with local amenities). Research on employee fit has established that it signifi cantly
lowers turnover (e.g. Hoffman and Woehr, 2006 ). Finally, sacrifice captures the perceived
losses that individuals may suffer when leaving their job (e.g. loss of retirement benefi ts, loss
of friendship support). Together, links, fit, and sacrifi ce reflect an employees ’ embeddedness
within a job. The more embedded they are, the less likely they will quit. What is particularly
novel about this approach to turnover is that job embeddedness considers not only links, fi t,
and sacrifi ce on - the - job, but also off- the - job – in employees ’ personal lives within the local
community. For example, an employee with children in middle school and a wife who is
engaged in local charities would have many close links to the community and therefore be
less likely to leave – especially if getting a new job would entail relocation.
In addition to considering an individual employee ’ s level of job embeddedness, recent
research suggests that turnover might be “ contagious ” and that co - workers ’ job embedded-
ness may influence an individual ’s decision to leave (Felps, Mitchell, Hekman, Lee, Holtom,
and Harman, in press). The less embedded one ’s immediate co - workers are, the more likely
it is that they engage in job search behaviors. In an environment characterized by low job
embeddedness, it may be more acceptable to discuss leaving or talk about other job oppor-
tunities. Thus, the salience and viability of leaving may increase when observing a number
of co - workers looking for other jobs.
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131CONTROL VOLUNTARY TURNOVER BY UNDERSTANDING ITS CAUSES
The evidence. A fundamental test of the concept of job embeddedness is whether it can pre-
dict actual turnover. A variety of studies have shown that this is indeed the case (cf. Allen,
2006 ; Crossley, Bennett, Jex, and Burnfi eld, 2007 ). Specifically, Mitchell et al. ( 2001 ) reported
that overall job embeddedness (on - and off - the - job) was negatively correlated with intention
to leave and predicted subsequent voluntary turnover in two different samples. In a study
with bank employees, Lee, Mitchell, Sablynski, Burton, and Holtom ( 2004 ) found that off - the -
job embeddedness predicted volitional absenteeism and voluntary turnover. Mallol, Holtom,
and Lee ( 2007 ) compared the relative strength of job embeddedness and its relationship to
turnover among Hispanics and Caucasians and concluded that while job embeddedness may
vary in strength across different demographic groups, it is nonetheless a robust predictor of
employee retention. Tanova and Holtom (in press) further found that notwithstanding differ-
ences in labor laws, cultural factors, and unemployment rates between Europe and the USA,
job embeddedness predicts turnover effectively on both continents. In summary, the diverse
nature of the samples used in job embeddedness research so far suggests that the negative
relationship between job embeddedness and turnover may generalize to many occupations,
organizations and contexts.
In addition to establishing that job embeddedness predicts employee retention, it is
important to show that it provides additional insights over and above the information the
other two approaches offer. Only then would it be justified and meaningful to separately
monitor embeddedness signals in addition to work attitudes, withdrawal cognitions, shocks,
and paths. Mitchell et al. ( 2001 ) showed that job embeddedness predicted turnover even
after taking into account the influence of gender, job satisfaction, organizational commit-
ment, job search, and perceived alternatives. In an independent study with a diverse sample,
Holtom and Inderrieden (2006) found that job embeddedness significantly improved the
prediction of turnover above gender and job satisfaction. In addition, they showed that
those employees who stayed on the job had the highest levels of job embeddedness followed
by employees who left due to a shock followed by employees who left with no precipitating
shock. Not only does job embeddedness supplement the traditional approach to turnover
research, but it also complements the unfolding model by showing how job embeddedness
may buffer the effects of shocks on turnover.
CASE EXAMPLES
Organizations do not have to be large to develop customized approaches for creating job
embeddedness. Moreover, the benefits of such efforts not only include improved employee
retention but also positive reputations as great employers that generate word- of - mouth
advertising and favorable public relations. Following are a number of examples from the
Wall Street Journal ’s Top Small Workplaces report (Spors, 2007 ).
Jere Cowden, chief executive of Cowden Associates, an actuarial and human resources
consulting firm, keeps a running list of consultants he deems to be the best in the business.
Then, when hiring, he draws from this list and evaluates how well each prospective hire
would fi t into the culture. Most also complete personality assessments to further assess fi t with
the organization.
FRCH Design Worldwide, an architectural and interior design company, works very
hard to promote strong corporate culture in the face of rapid growth. A big part of the
c07.indd 132 6/17/09 2:40:18 PM
132 MARION B. EBERLY, BROOKS C. HOLTOM, THOMAS W. LEE, AND TERENCE R. MITCHELL
company ’s effort is devoted to giving employees many chances to have fun together and
participate both at work and in their free time. It hosts an annual summer picnic for
employees and their families, a trip to a Kentucky horse - racing track, a yearly anniversary
party, and a Christmas party for families, along with some sporting events. Every other
Friday evening, the company hosts hour- long “ wing - dings, ” social gatherings at the offi ce
with food and drinks. While not all organizations will see the need to socialize so frequen-
tly, many would benefit from consciously considering how to increase the links among people
in the organization as FRCH has.
At Exactech, an orthopedic device manufacturer, an employee ’s training regimen
depends on his or her employee - development plan – a document updated at least twice a
year by the employee and his or her supervisor that lays out the employee ’s key development
area and “ action plan. ” Sometimes the action plan includes reading a book on a particular
topic. Other times it includes taking classes. For Anacielo Vale - Grogan, it meant going to
weekly French lessons and a six - week language course in France so she could better com-
municate with representatives from the company ’s large French distributor. Such a tailored
approach to employee development is relatively unique and represents a sacrifice an employee
would have to make if he or she were to leave Exactech.
While not everyone would want to work in rural Vermont, employees of NRG Systems,
a wind - measurement equipment maker, clearly do. Only one of 81 employees working there
quit last year. Part of the appeal is the unique setting. The company is housed in a newly
built solar- powered building replete with skylights, a commons area reminiscent of a ski lodge
and an indoor swimming pool. Further, employees are eligible for as much as $ 2300 annually
for purchases of items such as Toyota Priuses, backyard wind turbines, solar- powered water
heaters and energy - efficient light bulbs. No doubt these benefits attract unique employees
who fit with the local culture and want to be linked in such a community.
Finally, Corporate Ink Public Relations seeks to help its people reside in the local area.
Employees buying a home within 20 miles of the offi ce can get loans of as much as $ 10,000
at 2% interest, to help make the down payment – and the loans are forgiven after fi ve more
years of employment. This is clearly an example of creating sacrifices related to the community
where employees live and work.
APPROACH 4: WHAT THE CIRCUMSTANCES SURROUNDING
T
URNOVER TELL US
Monitoring for signs of voluntary quitting may not be enough
Is turnover functional and avoidable? A prevailing belief among many organizational behavior
scholars and practicing managers is that employee turnover should be minimized. From
the manager ’s perspective, turnover can substantially increase the costs of staffi ng, training,
and general administration. More subtly, turnover can also often disrupt a business unit ’s
operations and increase the workloads of remaining employees.
In contrast to this prevailing belief, a small body of empirical research indicates that
turnover should be more carefully managed rather than minimized. (See Maertz and
Campion ( 1998 ) for a thorough discussion of these issues.) Importantly, employee turnover
can be beneficial to a company if marginal performers voluntarily leave. Whereas
c07.indd 133 6/17/09 2:40:18 PM
133CONTROL VOLUNTARY TURNOVER BY UNDERSTANDING ITS CAUSES
“ truly bad ” performers might be fired, having too many marginal performers (e.g. those
persons who are not sufficiently bad to fire) can minimize a firm ’ s productivity. Similarly,
employees who may be labeled “ bad apples ” because they are chronically negative, do not
do their fair share of the work, or bully their co - workers, may have a detrimental effect on
how groups work together, and “ spoil the barrel ” (Felps, Mitchell, and Byington, 2006 ).
The value accrued by encouraging these people to resign can often offset that individual ’s
overall replacement costs. In a related vein, the new employees can oftentimes be a source
of new ideas and mechanisms to shake remaining employees out of their inertia (i.e.
“ getting new blood ” ). In those situations where labor costs are substantial and salaries are
expected to increase consistently over time, turnover can result in substantial savings and
thereby enhance organizational profitability (e.g. replace higher- wage customer service
agents with lower- paid new workers). In short, employee turnover should not simply be
minimized nor dismissed as an unmanageable process.
The evidence. Two empirical studies directly address the functionality and avoidability
of leaving. Based on termination records examined for a seven - month period, Dalton,
Krackhardt, and Porter ( 1981 ) identified the volitional quitting of 1389 former tellers
from 190 bank branches. Next, each former teller ’s immediate supervisor reported
judgments about (a) their preference on rehiring that person, (b) the former employee ’s
job performance, and (c) the ease of replacing that leaver. These voluntary leavers
represented a 32% overall turnover rate. When voluntary leavers were classifi ed into
dysfunctional (e.g. good employees quit) versus functional (e.g. marginal employees quit)
based on the supervisor ’s judgments on preference for rehire and job performance,
the turnover rate of dysfunctional leaving dropped to 18%. When classified by ease of
replacement, dysfunctional turnover (e.g. hard to replace) dropped to 9% of the overall
turnover rate. These data indicate that the quitting of some people is actually functional or
good for the company.
Using a sample of nurses, Abelson ( 1987 ) compared the job attitudes among 136
stayers, 30 avoidable leavers, and 16 unavoidable leavers over a one - year period. Levels of
job satisfaction and organizational commitment were signifi cantly lower for avoidable than
unavoidable leavers and stayers. That is, people who left for unavoidable reasons (e.g. a
spouse relocates) had satisfaction and commitment levels comparable to those who stayed.
People who left for avoidable reasons (e.g. bad work schedules) had worse attitudes than
those who stayed or those who left for unavoidable reasons. In addition, levels of thinking of
quitting and intentions to search and to leave were signifi cantly higher for avoidable leavers
than unavoidable leavers and stayers.
SHOULD TURNOVER BE ENCOURAGED OR DISCOURAGED?
When considered together, these data indicate the desirability of further classifying vol-
untary turnover by functionality and avoidability. Nevertheless, it remains the manager ’s
decision as to: (a) whether dysfunctional turnover should be discouraged; (b) whether
functional turnover should be encouraged; and (c) whether such turnover is also avoid-
able or unavoidable. These decisions focus the manager on differentiating between people
he wants to keep or lose.
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134 MARION B. EBERLY, BROOKS C. HOLTOM, THOMAS W. LEE, AND TERENCE R. MITCHELL
CASE EXAMPLE
As Lars Dalgaard, CEO of Successfactors, explains, organizations have an interest in not
keeping nasty and demeaning people (Sutton, 2007 ). Companies that tolerate such malicious
employees have trouble recruiting the best talent and have problems keeping clients. This
may lead to damaged reputations and reduced investor confidence. Other aspects of a
business may also suffer. For example, creativity and innovation may be impaired. And
cooperation with others within and outside the organization may suffer. In short, the loss
of a bad apple may be one of the best examples of functional turnover.
ACTION IMPLICATIONS
When all evidence is considered together, the results suggest value in monitoring for job
attitudes, global withdrawal cognitions, shocks, paths, and job embeddedness as well as
examining the functionality and avoidability of voluntary turnover. Although each man-
ager ’s situation will be different, general action implications can be inferred from the four
approaches reviewed. Initially, a company needs to determine the “ value to the firm ” of
each employee. That is, managers need to decide – based on a sound definition of job per-
formance and importance – which individual ’s leaving should be seen as a functional quit
and which should be seen as a dysfunctional quit.
Job performance and the issue of functionality
To judge whether a particular employee ’s quitting would be functional, managers must
have a solid definition of job performance. Job performance is commonly determined
by a job analysis and often operationalized by the content of the firm ’ s employee evalu-
ation form. Historically, a host of traditional variables have been applied: observable work
behaviors (e.g. cooperation), measurable employee actions (e.g. call time availability for tele-
marketers), supervisory judgments (e.g. quality, quantity, and overall performance), tangible
work outputs (e.g. number of widgets produced each day), or revenues generated (e.g. total
sales dollars).
An emergent issue among organizational behavior scholars is whether job performance
has been too narrowly defined. Underlying these various and traditional performance vari-
ables is the standard job. More specifically, performance is often tied very closely to the job ’s
formally required tasks. Scholars of organizational behavior have recently asked whether
measuring performance based on a job ’s required tasks and behaviors is too restrictive.
Substantial research evidence shows that: what gets measured directs employee
attention (e.g. dimensions of job performance); setting standards or goals directs employee
efforts and behaviors (e.g. good versus bad job performance); and providing feedback
allows for corrective actions toward the standard (e.g. the semiannual job performance
evaluation meeting). We know that by focusing attention toward one ’s narrowly prescribed
job tasks, work effort, behavior, and performance follow. It is not surprising then that
focusing on one ’s own job can also distract such work effort, behavior, and performance
away from other beneficial organizational actions. For a lower- level employee, for
example, a focus on one ’s job may decrease the likelihood of helping another employee
do his job. At the immediate cost of lost opportunity of doing one ’s own prescribed
c07.indd 135 6/17/09 2:40:19 PM
135 CONTROL VOLUNTARY TURNOVER BY UNDERSTANDING ITS CAUSES
job, that lower- level employee may impose larger costs on organizational effectiveness
by not helping another employee perform or learn to perform a job. For a higher- level
manager, a focus on one ’s narrowly defined job may decrease the likelihood of meeting
the larger organizational role of representing the company at industry and community
events. At no cost to doing one ’s own job, for instance, this manager may voluntarily
represent the company ’s commitment to community well - being or individual citizenship.
Thus, employees may overly focus on the immediate job and thereby actually hurt larger
organizational functioning.
Organizational behavior scholars have labeled our traditional focus on well - defi ned
and prescribed job behaviors as task performance, in - role performance, or job perform-
ance. In contrast, the broader focus that includes non - job - specific effort, behavior, and
performance but still benefits the larger firm is labeled extra - role performance, contex-
tual performance, or organizational citizenship behavior. In making decisions about an
employee ’s functional versus dysfunctional and avoidable versus unavoidable quitting,
managers should also decide whether individual and organizational effectiveness can be
enhanced by a traditional focus on the narrowly defined job functions or by a broader
focus on task and contextual performance. In our judgment, the broader focus is typically
better than the narrower view toward individual and organizational effectiveness.
The details of the unfolding model and avoidability
The unfolding model becomes particularly helpful in assessing avoidability because (a) path
4 captures much of the traditional approach, and shocks capture much of the avoidability
issue. Because the speed of path 1 quitting can be unpredictable and the speed of path 2 quit-
ting can be quite quick, managers may have minimal opportunity to respond to shocks that
may initiate such leaving. Instead, they may need to have already in place a mechanism that
allows for proactive and quick actions aimed at encouraging or discouraging an employee ’s
leaving (e.g. quick counteroffers, rapid and informal grievance procedures, open - door policies
by the firm’s top executives). One technique that we’ve developed is to gather examples of (or
stories about) actual shocks (e.g. specific events that initiate actual quitting) from leavers and
other examples of events that prompted stayers to think about quitting. Managers can then
simply list these examples and ask current employees (a) whether these events would prompt
thoughts of leaving and (b) what scripts they might have in place and follow if the event
were to occur. This information can help managers anticipate the events that likely prompt
thoughts of quitting and scripted actions. As a result, the informed manager can elect to be
proactive (or inactive) in discouraging (or encouraging) leaving.
In contrast, quitting in paths 3 and 4 is more predictable and slower. Because people
search for alternatives and evaluate the located options, managers may have more oppor-
tunity to respond. Thus, they may have more opportunity to craft individualized actions that
can encourage or discourage quitting (e.g. matching pay increases from external job offers,
dealing with accumulated job dissatisfaction, restructuring one ’s job responsibilities, reas-
signing employees to other units within the company, loaning employees to external service
organizations like the United Way).
Besides merely reacting to employees ’ withdrawal behaviors and cognitions, managers
can also take a more proactive stance and reduce turnover by attempting to embed
employees within their jobs. Managers may increase their employees ’ job embeddedness by
hiring employees who already have established ties to the organization (e.g. peer referrals)
c07.indd 136 6/17/09 2:40:19 PM
136 MARION B. EBERLY, BROOKS C. HOLTOM, THOMAS W. LEE, AND TERENCE R. MITCHELL
or the community. Then, for all the newcomers, it is important to effectively integrate them
into the social fabric of the organization. For example, training all newcomers together as
a group, revealing the exact timing of the progression through the various socialization
stages, and providing positive social support through organizational role models are all ways
through which new employees may be embedded on the job during their first weeks in
the organization (Allen, 2006). Once socialized, managers may continue to infl uence their
employees ’ ties, fit, and sacrifices by, for example, designing work around teams, establish-
ing mentoring programs, organizing social events, and identifying clear promotional paths
through training and developmental activities.
How to monitor job attitudes, global withdrawal cognitions,
shocks, paths, and job embeddedness
Surveys. Job satisfaction, organizational commitment, global withdrawal cognitions, and
job embeddedness can be efficiently and validly measured via organizational surveys.
In parti cular, they can be assessed with standard, professionally developed, and well -
researched meas ures (e.g. validated scales). For several of the better- known scales, more-
over, they are copyrighted and commercially available. Some of these validated scales
measure global job satis faction, organizational commitment, withdrawal cognitions, and
job embeddedness whereas others measure facets of satisfaction, commitment, withdrawal
cognitions, and embeddedness. Although valid, standard scales are often quite long. As a
result, questionnaire length can discourage survey completion, and less information is actu-
ally obtained. Although less reliable and less valid than the longer standard scales, research-
ers and managers often must compose and use a smaller number of original questions (e.g.
one to five items) to measure overall job satisfaction, organizational commitment, global
withdrawal cognitions, and job embeddedness. Albeit less desirable, long - standing research
practice and enduring empirical evidence indicate an acceptable tradeoff between shorter
questionnaire length and lower (though adequate) strength in predicting voluntary turnover
(e.g. Arnold and Feldman, 1982 ).
Management by wandering around (MBWA). Although shocks and paths can be measured
with surveys, these concepts are relatively new. As a result, there are no standard and
validated scales for their measurement. In addition to the technique of listing actual and
potential shocks and scripts (described above), there are other useful techniques for iden-
tifying paths. In their delightful book, In Search of Excellence, Peters and Waterman ( 1982 )
initially recommended MBWA. The idea is simple and appealing. Managers should priori-
tize and allocate a certain portion of their day to watching, talking, and generally interact-
ing with their employees. If done consistently and sincerely, understanding, empathy, and
trust should develop. As a direct result, managers should readily learn: (a) what individuals
interpret as shocks; (b) whether scripts exist; (c) the specific content of images and if image
violations occur; (d) how embedded the employee is; and (d) whether job search cognitions
and behaviors are engaged. Although performance appraisals may also generate some of
this information (assuming managers have established an open and honest relationship
with their employees), they are typically only conducted once or twice a year and would
therefore miss out on crucial time - dependent information such as the occurrence of a
shock. Consistently “ wandering around, ” however, allows managers to collect data in real
time and to intervene immediately as needed.
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137CONTROL VOLUNTARY TURNOVER BY UNDERSTANDING ITS CAUSES
EXCEPTIONS
The research that we’ve reviewed offers some clear advice on managing (or controlling)
employee turnover such as monitoring for signs or predictors of employees ’ quitting and
assessing the functionality and avoidability of employee turnover. With that said, however,
there are a number of considerations that should strengthen or weaken our recommended
actions.
Importance of workforce stability
Selective retention is less important in situations where workforce stability is less critical; con-
versely stated, retention is more important in situations where stability is more critical. Four
questions immediately arise. First, are replacement employees readily available? If replace-
ment employees are readily available, selective retention should be less important to man-
agers. An immediate indicator of availability is the unemployment rate in the “ relevant labor
market. ” Numerous studies indicate a consistently negative, substantial relationship between
aggregate turnover and unemployment rates (r ’s commonly .80 and higher). In general, the
higher the unemployment rate, the higher the availability of replacement employees.
Second, can the requisite job - specific knowledge, skills, and abilities (as well as broader
needs for contextual, citizenship - based performance) be readily taught? If success in train-
ing is relatively quick and inexpensive, selective retention should also be less of an issue.
Two immediate and related indicators of training success are the job ’s organizational level
and whether advanced education is required. In general, lower- level (e.g. non - exempt)
jobs that do not require advanced educational experiences (e.g. bachelor ’s or master ’s
degrees) should lend themselves to quicker and less expensive training than higher- level
(e.g. exempt) positions that require higher education. When considered together, lower-
level jobs that are filled primarily with non - college - educated persons and that occur in
labor markets with high unemployment rates strongly suggest far less attention might be
devoted to selective retention.
Third, it is becoming increasingly clear that many employees are valued for their
human and intellectual capital. More specifically, some employees may have specialized
knowledge that is critical to organizational effectiveness. With the (incredible) pace of
organizational change and the competitive nature of many industries, human and intel-
lectual capital should become increasingly important in a manager ’s judgment about what
is and what is not functional turnover.
Fourth, as an organization’s success becomes more dependent on relationships, net-
work connections, and interactions with others within and outside of the organization,
an employee ’s social capital, independent of his or her skills, knowledge, and abilities,
becomes a more critical asset. If employees with high social capital quit, they might
leave behind a communication gap that cannot easily be filled. Unless other employees
have worked closely with the quitter and developed a similar network of connections in
both quantity and quality, such social capital losses may lead to immediate decrements
in performance that, due to the inherently interdependent nature of today ’s work, may
ripple throughout the organization (Dess and Shaw, 2001 ; Shaw, Duffy, Johnson, and
Lockhart, 2005 ). In sum, managers need to consider the availability of replacement workers,
the ease of training, and the leaver ’s human capital, intellectual property, and social capital
in judging the functionality of an individual ’s turnover.
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138 MARION B. EBERLY, BROOKS C. HOLTOM, THOMAS W. LEE, AND TERENCE R. MITCHELL
Finally, such analysis is not only important in operating an organization, but is also
potentially vital to successful merger and acquisition activity. According to research done
by partners at Bain Capital (Harding and Rouse, 2007 ), people issues are often at the root
of failed deals. In analyzing 40 recent merger and acquisition deals, the 15 that were clas-
sified as successful, the acquirers had all identified key employees for retention during the
due diligence phase or within 30 days of the announcement of the deal. This task was
carried out in only one third of the unsuccessful deals.
Organizational types
Selective retention and workforce stability can be less critical in certain organizational
types. In particular, turnover is likely unimportant in temporary organizations whose sole
purpose is to create a given project or produce a certain service, and then, by design,
disband. Common examples include independent motion picture productions (e.g. shoot-
ing a movie), political campaigns (e.g. winning an election), and joint ventures intended
to spread risk across the multiple participants (e.g. oil exploration). Similarly, bureauc-
racies, which are relatively buffered from market forces (e.g. state and local governments,
public universities), may have limited concern with retention and stability because, for
example, of sufficient slack resources, adequate time to forecast accurately human resource
requirements, or de facto monopoly position. Finally, those organizations where creativity
and innovation are critical to survival might actually consider encouraging departures of
less creative or innovative employees (e.g. think - tanks, innovation centers, and advertising
fi rms).
“ The more things change, the more things
stay the same ”
Given that people will and do quit firms, how have companies begun to control the leaving
of these kinds of extraordinary and other less extraordinary (aka normal) people? Certainly,
there is no single magic bullet that all firms should follow. With increasing frequency, how-
ever, many firms have (re)turned to the old fashion and followed the now counterintuitive idea
of proactively building loyalty via mutual company and employee commitment (Bernstein,
1998 ). In other words, they seek to prevent the seeds of leaving (e.g. shock, image violations,
and decline in job attitudes) before they get planted.
With these ideas in mind, Booz, Allen, and Hamilton implemented job rotation to help
their consultants balance family and work stresses. During periods of unusual family tur-
moil, for example, consultants can be reassigned to jobs with stable hours and minimal
travel; as a result, it is easier for their employees to deal with the work– family stresses. At
International Paper (IP) and Citigroup, for instance, career development programs have been
implemented. At IP, 13,000 white - collar workers must meet annually (and separately from
their performance appraisal meetings) to map their long - term career strategies and their
next specific job move. At Citigroup, 10,000 managers are reviewed twice a year to identify
their next job placement. In short, labor market imperatives are driving fi rms to manage the
quitting process proactively, and the research in organizational behavior provides strong and
compelling managerial tactics.
c07.indd 139 6/17/09 2:40:20 PM
139CONTROL VOLUNTARY TURNOVER BY UNDERSTANDING ITS CAUSES
CONCLUSION
In our view, this chapter mirrors a larger megapoint that underlies this entire vol-
ume. More specifically, the research on organizational behavior offers discernible,
interpretable, logically consistent, and empirically verifi able foundation principles.
With respect to controlling turnover, we confi dently advise the following. First, con-
sider whether selective retention and workforce security is sufficiently important in
your particular firm’s situation. If it is, then decide whether an employee ’ s quitting
is functional (versus dysfunctional) and avoidable (versus unavoidable). Third, antici pate
an employee ’s leaving by monitoring job attitudes, global withdrawal cog nitions,
shocks, paths, and job embeddedness. Fourth, look at the shocks or levels (and
reasons) of job dissatisfaction and embeddedness and decide whether there is any-
thing the company can do (e.g. is this turnover avoidable?). Fifth, determine whether
that employee is likely to leave more quickly (e.g. paths 1 and 2) or slowly (e.g. paths
3 and 4), which in turn advises a manager to be proactive (for path 1 and path 2
processes) or more reactive (for path 3 and path 4 processes). Finally, gather most or
all of this information by routine employee surveys and/or “ management by wan-
dering around ” (e.g. talk to people).
Simply put, our prescriptions say that turnover is a process that requires more active
attention and management than it typically receives. Employee surveys are routinely
administered, for example, but this information is infrequently used for specifi c and
proactive interventions aimed at controlling turnover. Similarly, many companies desig-
nate their “ key ” employees whose leaving would be clearly dysfunctional but take little
action to understand the events that prompt their thoughts of leaving. Also, com panies
can better anticipate employees ’ reactions to shocks by managing the information
immediately before and after the occurrence of a particular jarring event. Job coun-
seling can be made available, for instance, to deflect path 3 and 4 processes. Finally,
companies can simply make it harder for employees to leave by “ embedding ” their key
employees in the organization. For example, using teams, having people serve as men-
tors or having responsibilities for projects maintains attachments (or linkages) to fi rms.
Generous perks and rewards contingent on continued tenure can also render turnover
less appealing. In sum, controlling turnover requires substantial understanding of the
phenomenon and the willingness to be proactive or reactive in managing the quitting
process. Ultimately, appropriate management of turnover can increase organizational
effectiveness and the bottom line.
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job turnover. Journal of Applied Psychology, 67 , 350–360 .
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140 MARION B. EBERLY, BROOKS C. HOLTOM, THOMAS W. LEE, AND TERENCE R. MITCHELL
Bentein , K., Vandenberg , R., Vandenberghe , C., and Stinglhamber , F. ( 2005 ). The role of
change in the relationship between commitment and turnover: A latent growth modeling
approach. Journal of Applied Psychology , 90 , 468–482 .
Bernstein , A. ( 1998 ). We want you to stay. Really. Business Week ( June 22), 67–72 .
Bronson , P. ( 1999 ). Instant company. The New York Times Magazine ( July 11), 44–47 .
Crossley , C. D., Bennett , R. J., Jex , S. M. , and Burnfield , J. L. ( 2007 ). Development of a
global measure of job embeddedness and integration into a traditional model of voluntary
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empirical assessment. Journal of Applied Psychology, 66 , 716–721 .
Dess , G. G. , and Shaw , J. D. ( 2001 ). Voluntary turnover, social capital, and organizational
performance. Academy of Management Review, 26 , 446–456 .
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model of voluntary turnover. Journal of Organizational Behavior, 27 , 59–77 .
Dvorak , P. ( 2007 ). Hotelier finds happiness keeps staff checked in. Wall Street Journal
(December 17), B3 .
Felps , W., Mitchell , T. R. , and Byington , E. ( 2006 ). How, when, and why bad apples spoil
the barrel: Negative group members and dysfunctional groups. Research in Organizational
Behavior, 27 , 181–230 .
Felps , W., Mitchell , T., Hekman , D., Lee , T. , Holtom , B. , and Harman , W. (in press).
When staying depends on others: Collective job embeddedness as a predictor of
employee turnover. Academy of Management Journal .
Griffeth , R. W., Hom , P. W. , and Gaertner , S. ( 2000 ). A meta - analysis of antecedents and
correlates of employee turnover: update, moderator tests, and research implications for
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Harding, D. , and Rouse , T. ( 2007 ). Human due diligence. Wall Street Journal (October 2), A16 .
Hoffman , B. J. , and Woehr, D. J. ( 2006 ). A quantitative review of the relationship between
person – organization fit and behavioral outcomes. Journal of Vocational Behavior, 68 ,
389–399 .
Holtom , B. C. , and Inderrieden , E. ( 2006 ). Integrating the unfolding model and job embed-
dedness to better understand voluntary turnover. Journal of Managerial Issues, 18 , 435–452 .
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turnover: What they are and how organizations can manage them. Human Resource
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Hom , P. W. , and Griffeth , R. W. ( 1995 ). Employee Turnover. Cincinnati, OH : South - Western
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141CONTROL VOLUNTARY TURNOVER BY UNDERSTANDING ITS CAUSES
Lee , T. W., Mitchell , T. R. , Sablynski , C. J., Burton , J. P. , and Holtom , B. C. ( 2004 ). The
effects of job embeddedness on organizational citizenship, job performance, volitional
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EXERCISES
Shock questionnaire
On a piece of paper, quickly provide answers to the following questions:
1. Have you ever left a job in response to a shock (a jarring event that caused you to
reconsider your attachment to the organization)?
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142 MARION B. EBERLY, BROOKS C. HOLTOM, THOMAS W. LEE, AND TERENCE R. MITCHELL
2. Do you know any people (e.g. friends, family, colleagues, former classmates) who
have left a job in response to a shock?
3. What type of shocks did you or they experience?
4. Categorize the shocks according to the following criteria:
(a) Personal vs organizational
(b) Expected vs unexpected
(c) Positive vs neutral vs. negative
5. What responses to the shocks were enacted by the organizations?
6. Were these responses effective in stemming turnover? If not, what should have been
done?
Job embeddedness
Recently, a new theory has been designed to help organizations reduce voluntary turn-
over by increasing “ job embeddedness. ” Empirical evidence suggests that such efforts are
typically complementary to the traditional approach (e.g. increasing job satisfaction or
organizational commitment) because job embeddedness focuses on different factors. Take
a few minutes to think through the following issues with a small group of people from
your organization.
How can your organization systematically increase each of the following aspects of job
embeddedness among employees?
1. Fit in the organization (perceived congruence with the values, culture, etc.).
2. Links in the organization (number of people, groups and projects employees are
meaningfully attached to).
3. Sacrifice related to leaving the organization (specifi c perks, benefi ts, or hardships
incurred upon leaving).
4. Fit in the community (congruence with the values, amenities, offerings in an area).
5. Links in the community (number of institutions, friends, and family that employees
are connected with).
6. Sacrifice related to the community (community - based issues that would arise if an indi-
vidual leaves an organization; relocation to a new city is not required; for example, new
commute patterns).
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Part IV
MOTIVATION
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8
Attain Emotional Control by
Understanding What Emotions Are
*
EDWIN A. LOCKE
“ Know thyself ”
—Inscription above the Temple of Apollo at Delphi, Greece
There has been considerable interest in emotions in the workplace over the last 15 years,
but strangely most discussions of emotion (even those outside the fields of organizational
behavior and I/O psychology) have lacked one thing: a defi nition of emotion!
Why? Because one can only grasp the nature of emotions by introspection – by looking
inwards at one ’s mental contents and processes – and introspection has been unoffi cially –
and wrongly – banned (for reasons I need not go into here) from the field of psychology for
close to 100 years (Locke, 2009).
WHAT EMOTIONS ARE
The nature of emotion
I will begin by defining what I am talking about: emotions are the form in which one experiences
automatic, subconscious value judgments (value appraisals), Appraisal theory was fi rst identifi ed in
psychology, to the author ’s knowledge, by Arnold ( 1960 ), but see Peikoff ( 1991 ) for a more
complete statement. Every emotion involves a specific type of value appraisal. For example:
◆ Fear is the form in which one experiences a perceived threat to one ’s life or well - being
(or that of a loved one).
◆ Anxiety is similar to fear but the nature of the threat is more uncertain and may
involve one ’ s self - esteem.
*
Note: Because my examples in this chapter refer to people ’s internal states, usable reports
from business people about their emotions are hard to come by. Thus some of the cases
I use in this chapter are fictional (the real ones will be noted). Nevertheless, I believe they
are realistic, that is, representative of real experiences.
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146 E DWIN A. LOCKE
◆ Sadness is the form in which one experiences the loss of a value. (Depression is a
more intense form of sadness involving self - deprecation and a sense of hopelessness.)
◆ Anger is the form in which one experiences a perceived injustice or goal frustration.
◆ Guilt is the form in which one experiences the perception of violating one ’s moral
values.
◆ Satisfaction is the form in which one experiences having gained or possessed a value.
◆ Love is the response to something appraised as a positive value. ( It is a stronger emo-
tion than satisfaction and the value does not necessarily have to be possessed (e.g., a
work of art).
◆ Pride is the form in which one experiences an achievement, including the achievement
of one ’s moral character, due to one ’s own efforts.
◆ Happiness is the state of non - contradictory joy (stronger and more all - encompassing
than satisfaction).
◆ Admiration is the form in which one appraises the positive achievement(s) of another
person.
The universal pattern of every emotion (excepting those caused by abnormal brain
states or hormone imbalances) is: object →cognition→ value appraisal → emotion. The
object can be a thing, a person, an action, an event, an idea, a memory or a previous
emotion. (In some cases people may not be aware or only peripherally aware of what the
precipitating object is.) The cognition stage involves one ’s perception of the object and
the present context plus all the stored knowledge which the subconscious automatically
associates with the object. The value stage involves subconsciously “ measuring ” the object
with respect to whether some value is perceived as being threatened or fulfilled in some
form and to some degree. All emotions have either a positive or negative valence but to
varying degrees, for example loving is stronger than liking, hating is stronger than dislik-
ing. (Emotions, of course, are accompanied by various physiological reactions. However,
there is rarely any fixed, universal pattern of physiological reactions that is a unique indi-
cator of one specific emotion for all people, though for certain basic emotions such as
fear there may be broad similarities. Basic emotions, however, do have characteristic facial
expressions.)
The crucial point here is that the two middle stages, cognition and value appraisal, are automatic
(lightning fast and not chosen) rather than volitional, and subconscious rather than conscious. So what
one consciously experiences is: object →emotion. In a waking state one is continually experiencing
emotions, because the subconscious is always at work, although many emotions are mild
and fl eeting and thus not signifi cant enough to notice or analyze.
A mood is an enduring emotional state
A mood is enduring because the object (such as an unpleasant boss) is omnipresent or
because the subconscious causes endure based on memory (such as following the loss of
a job one loved) or rumination (replaying the triggering event or one ’s thoughts about it).
Some have argued that moods are defined by their having no known causes. Sometimes
the cause of a mood is not known but that does not mean it cannot be identifi ed.
A good strategy is to identify exactly when the mood began and what was happening at
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147 ATTAIN EMOTIONAL CONTROL BY UNDERSTANDING WHAT EMOTIONS ARE
the time, with respect to events or thoughts. For example, a spat with one ’s romantic
partner could cause one to feel depressed all day (or longer). The emotional remnants of
an unpleasant work experience (or a failed romance) could linger for days, months or even
years. (Admittedly, some moods are caused by hormone imbalances.)
What ’s the proof that the causal, subconscious processes noted above really exist and
cause the emotion? One has first to introspect backwards in time. Consider the following
example.
Pat comes to a business meeting and is severely criticized by her boss for certain
“mistakes ” that caused the company to lose an important account. In reality, she was
not to blame. It was the project leader who messed up the account, including acting
against her advice in several important respects, and then told the boss that the outcome
was Pat ’ s fault.
The main, immediate, automatic emotion Pat will feel will be anger, because a grave
injustice was committed towards her. The object was the attack. If asked what was upset-
ting after the fact, Pat could cognitively identify one key fact: the attack was based on false
information. If asked what value was violated, Pat would say: the desire for just treatment
(and/or honesty).
One can further validate the model by mental experiments in which the “ script ” is
revised. “ How, ” you ask Pat, “ would you have felt if the boss had, instead of attacking you,
attacked the project leader, after having gathered relevant information from reliable sources?”
Pat ’s answer would probably be something like, “ I would not feel anger. If the boss spoke
factually without becoming enraged, I would have felt it was just but also a bit sad, because
I wanted the project to succeed. If he had exploded with rage, I would have felt some fear,
because it would mean the boss lacked self - control and could attack me next. ”
Next, one could ask, “ What would you feel if deep down you considered justice to be
an unobtainable value in this world and never expected to see it. ” Pat would probably
reply that what she would have experienced is a kind of hopeless, cynical resignation, or
sadness rather than anger.
(One can also validate the model with a simple pseudo - experiment. To show intro-
ductory psychology students the effect of ideas on emotions, I would suddenly state, in
the middle of a class, that we were going to have an unannounced quiz right then, on the
assigned reading which would count towards their final grade. The two emotions that auto-
matically emerged every time were: anxiety and anger. The value standards involved are
obvious. The emotions disappeared immediately when I said that I was just kidding in order
to illustrate a point.).
The important point here is that the output, the emotion, is the result of three inputs:
the object (event), the cognitive associations to the object and context, and the value
appraisal(s). One input is usually (though not always) conscious and two are subconscious,
but change any of these, and the emotion is changed. (I will have more to say about chang-
ing emotional responses later.)
The findings of neuropsychology do not invalidate the above model. Obviously, everything
is stored in the brain and mental processes occur somewhere (e.g. the limbic system, or in
several different places). But the brain is only the hardware. The ideas stored in the mind
can be viewed as the software – they give the brain cognitive content. The concept of
emotion would have no relevance or meaning to a totally unconscious being.
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148 E DWIN A. LOCKE
It is because people hold different ideas and values that the same object can cause different
emotions in different people (and different emotions at different times in the same person,
if their ideas change). A stern boss can be seen by one employee as businesslike and focused
whereas another employee (with different beliefs and values) might see the same boss as
cold and unfeeling. Even if the different emotions were processed in different parts of the
brain, brain scans cannot identify the content of the person’s ideas nor explain why different
people process the same event differently.
Multiple emotions
It is possible to experience more than one emotion toward an object, especially a person,
at the same time. Imagine an employee who cannot be located for three days. Then he
comes into the office with a brilliant marketing plan that could save the company. The
manager might experience three different emotions: anger because of being frustrated by
the employee ’s mysterious disappearance; relief that the employee showed up; and elation
about the marketing plan. One can also hold emotions at different levels. At one level an
employee might admire a smart boss and at a deeper level feel jealous or inadequate. The
human mind is a wonderfully complex instrument. (In romantic relationships things can
get even more complicated – but that ’s another book).
Emotions and action
Every emotion has a built - in action tendency (Arnold, 1960 ), i.e. a felt impulse to action.
(Again, such tendencies can be identified by introspection.) The survival value of, for
example, lion →fear→run, etc. is obvious. The cave man who engaged in long, cognitive
deliberation when confronted by a wild beast would not have many future opportunities
to reproduce.
The action impulses for positive appraisals include wanting to keep, hold, or protect the
valued objects. The impulses for negative emotions include wanting to avoid or harm (ver-
bally or physically) the disvalued object.
It must be stressed that, although emotions automatically contain action impulses, everyone
(this side of mental illness) has volitional choice as to what action to take in response to
emotions. This too is validated by introspection. Consider this example.
Joe is called into the vice president ’s office and informed that he is being fi red after
15 years with the company. Joe has long believed that he was unfairly treated and had all
along been set up for failure by organizational politics. Joe is very angry at this perceived
injustice. Joe ’s action impulse is to get even. Many possible actions might occur to him
immediately. (Others might occur to him later.) One is to punch the boss on the nose.
Another is to come back with a gun and kill some people. Another is to give the VP a
tongue - lashing. Another is a blog attack on the company. Another is a lawsuit. Another is
to pressure the company for a generous termination bonus.
Observe here that Joe may consider many action alternatives (which might or might
not be similar to those of a different fi red employee) but no overt actions are forced on Joe
by his subconscious. Joe has the power, despite whatever impulses he might have, to consider
different responses and to choose among them. Here is where, unlike the case of the lion
menacing the cave man, he has time for deliberation, including the power to consider
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149 ATTAIN EMOTIONAL CONTROL BY UNDERSTANDING WHAT EMOTIONS ARE
the pros and cons of various alternatives and to choose an appropriate course of action,
including the choice of no action.
Which action Joe chooses will depend, in part, on his moral code. If he considers
initiating physical force to be immoral, this will rule out all overtly aggressive acts. Of the
remaining possibilities, the choice will depend on any number of personal factors such as
knowledge, personality, and thinking.
( If Joe has spent his entire life acting impulsively, in which case he probably would
never have held any job for very long and might even have a criminal record, self - control
could be much more diffi cult because of the bad habits he had acquired.)
Emotions and reason
It has been treated as a virtual axiom from ancient Greek philosophers to the present day
that emotions and reason are inherently at odds, i.e. in conflict. This is known in philosophy
as the mind – body dichotomy. ( There are other versions of the mind – body dichotomy but
reason vs emotion is the most common version.) The belief is considered even more rock -
solid today because the center for emotions is located in a different part of the brain than
the center for thinking. However, this does not prove the case, because different parts of the
brain are interconnected. The evidence from cognitive therapy is that you can change emo-
tions by changing the thoughts underlying them (Butler, Chapman, Forman, and Beck,
2006 ; Clark and Beck, 1999 ). And, as noted, one can see that emotions are the product of
(subconscious) ideas by introspection.
I believe the concept of a mind – body dichotomy to be profoundly mistaken (see Peikoff
( 1991 ), especially Chapters 1 , 5 , and 7 , for a more detailed discussion). The cause of this
error is, most fundamentally, the inability or failure to introspect.
What people experience as clashes between reason and emotion are actually clashes between consciously
held and subconsciously held ideas.
Consider Sandra, a unit manager. When things go wrong, she gets angry and has the
automatic urge to lash out at her subordinates; on the other hand, her reason tells her that
this is a poor management practice. She thinks, “ It ’s just reason versus emotion again.
That’s just the way people are.” But are they? Why does Sandra feel angry? Perhaps
because her subconscious premise is, “All my employees should do everything right all the
time. ” Or, “ I shouldn’t have to be bothered by crises; I have other things I need to spend
my time on. ” Or, “ This will make me look bad and hurt my career. ”
Observe that the fi rst two subconscious premises are mistaken; people do make mistakes
and things just don’t go perfectly all the time in any business. The third premise may be
mistaken unless things go wrong constantly, but more relevant is what she learns from
her mistakes so they are not repeated. If Sandra identifies her wrong premises through
introspection, she has the power to correct them. Further, she can go deeper. She can ask
herself why the problems that bother her arise in the first place, “Am I hiring capable,
conscientious employees? Are they getting proper direction and training? Are crises occurring
because there are issues I did not make an effort to foresee? ”
( I will not go further into psychopathology in this chapter, but it is possible that Sandra
is displacing her anger over something else – such as a troubled romantic relationship –
onto her employees, or that she is feeling low self - efficacy (see Chapter 10 , this volume)
and is defending against her own self - doubts.)
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150 E DWIN A. LOCKE
Although emotions contain action impulses, they are, in a fundamental respect, the passive
part of one ’s psychology. Given the perceived objects and one ’s premises at a given time, emo-
tions are not chosen or willed; they just happen. Reason, on the other hand, is the locus
of volition (Binswanger, 1991 ; Peikoff, 1991 ; this too is validated by introspection). One must
choose whether to think or not to think. Reason is the active, self - caused part of one ’s psychol-
ogy. Through reason we have the power to understand our emotions, to choose what action
we will take in response to them and to reprogram them if needed. (Reprogramming can be
very difficult in some cases, for example childhood abuse, post - traumatic stress disorder).
Consequences of emotion at work
It is interesting that studies of the consequences of subordinates ’ and leaders ’ emotions
(or moods) at work, for example decision making, helping behaviors, absenteeism, sub-
ordinate performance in response to leader emotions, often lead to inconsistent or contra-
dictory findings (Grandey, 2008 ; Humphrey, 2008 ). This would be expected if there was
no deterministic relationship between emotions and specific actions (as contrasted with
felt action tendencies). One of the most consistent findings in the literature is that low
satisfaction is more likely to lead to turnover (quitting) than high satisfaction, but even
here there are important exceptions (see Chapter 7 , this volume). Since emotions in everyday
life are not separate from cognitions (e.g. stored knowledge, interpretation of the current
situation), one would need to know not only how a person feels but also how and what they
think in order to predict and explain how they will act in the face of emotions.
Changing an emotion
Because emotions are automatic one cannot change them directly; one can only change
them indirectly by modifying their causes.
Consider Peter who failed to get a much wanted promotion at XYZ Corp. He felt
great disappointment, sadness, some anger, and considerable anxiety because he “ failed ”
and now doubted his own competence. What can Peter do? The object is the failure to get
a promotion. He cannot change that, but he can increase his chances for future success
by seeking feedback regarding what his boss considers his weaknesses. He can then try to
improve himself. What of his automatic cognitive appraisals? He may have subconsciously
concluded that he was stupid and would always be a failure. These are clearly overgenera-
lizations that he can correct (cf. cognitive therapy). Finally, what of his value appraisal?
He did not get what he wanted, thus the disappointment. And maybe he is not even capable
of rising to the top of his industry. But if so, he can substitute new value standards, new
aspirations that fit his capabilities. He might even change his career to something he likes
more. Gradually, disappointment can be replaced by hope and self - doubt with self - effi cacy.
I may have made this sound easier than it is, because there are always layers of value
standards. Some may be tied to Peter ’s self - image or self - esteem, and people are often
reluctant to give up the way they have viewed themselves. Sometimes changing this requires
professional help. Also, deeply automatized premises that are tied to one ’s self - concept
may take some time to change. Professional help may be required here as well. But the
point is that one is not helpless in the face of emotions, because, as I noted, they are not
psychological primaries (chemical imbalances aside).
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151ATTAIN EMOTIONAL CONTROL BY UNDERSTANDING WHAT EMOTIONS ARE
Emotions and life
The psychological role of emotions is not simply survival for the cave man. The issue
goes deeper. The role of emotions is to make your values psychologically real – as opposed to fl at,
cognitive abstractions. There is an enormous difference between saying “ X is a good
thing ” and feeling an actual (and possibly burning) desire for it. Without desire, man is
just an unmotivated robot. Emotions are not tools of actual knowledge (knowing requires
reason); they are tools of motivation. They allow you to experience wanting, and thus be
motivated to act.
Tragic errors are made by those who reverse these roles. Acting only on emotions with-
out reason substitutes feelings for knowledge and thereby puts one ’s life out of control. An
“ emotionalist ” will swing wildly from one impulse to the next with no sense of purpose
or long range goal. On the other side of the coin, using reason but repressing emotions
destroys one ’s capacity for joy and undermines one ’s motivation to pursue values. The
issue is not reason or emotion but both together, in harmony. Harmony between reason and
emotion is impossible without introspection. For example, a troublesome emotion can be
caused by wanting the irrational, for example wanting a promotion one does not deserve.
To summarize the key points made so far:
1. Emotions are not unanalyzable primaries but the consequences of ideas stored in
the subconscious.
2. Emotions are automatic but can be changed indirectly by changing the inputs
(their causes).
3. There is no innate or inherent conflict between reason and emotion; such clashes
are actually clashes between consciously held and subconsciously held ideas.
4. Emotions do not compel action; everyone (who is not suffering from severe mental
illness) has the power to make choices in the face of emotional responses (including
the choice of taking no action).
5. Both emotions and reason are critical to a successful and happy life. But it is critical
to understand the proper function of each and to keep them in harmony.
MEDIATORS
The psychological mediators (causal mechanisms) of emotions are those noted earlier: the
object that triggers the emotion, the subconscious cognitive associations to the object, and
the subconscious value appraisals which follow.
MODERATORS
The key moderating factors in understanding emotion and in harmonizing reason and
emotion are skill at introspection and the willingness to do it. People who won’t or can’t
introspect will feel afraid of their emotions, because they will seem causeless, incompre-
hensible and uncontrollable.
Why don’t people introspect? There are many reasons. One is that, in a way, it is not
“ natural. ” Extrospection is natural; every child starts life by looking outwards. Further, one
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152 E DWIN A. LOCKE
gets immediate feedback if one fails to extrospect, like running into doors, or tripping over
clothes or touching something hot on the stove. There is no such immediate, unequivocal
feedback for not introspecting.
Second, most people don’t know how to introspect. No one teaches it and psychologists
have pretty much banned it from the literature for the past 100 years.
Third, most people do not see its value. The benefits are not immediately self - evident;
it takes time to understand oneself and to see the payoff.
Fourth, introspection is hard work. Unlike extrospection (at the perceptual level) there
is no special sense organ for looking inwards. It is a volitional process requiring the use of
one ’s conceptual faculty. Many people do not want to expend the effort of actually thinking
(reasoning) about either their own consciousness or the outside world.
Fifth, many people fear introspection. They fear what they might find or what they might
have to face. They fear their emotions are primaries and are out of their control. They fear
that understanding themselves might threaten their self - image or self - esteem which is built
on various defenses which they do not want to acknowledge. This can become a vicious
circle, because the more they rely on defenses, the more vulnerable they become and the
more defenses they have to erect. Defenses are designed subconsciously to escape from real-
ity, but, in the end, reality cannot be escaped. The more “ well defended ” an individual is,
the more detached he is from reality. Of course, as implied earlier, people have the power to
act against their fears.
Because most people are not very good at introspection, self - reports of emotion should
be at least somewhat suspect (i.e. considered subject to error) unless the individual has
some skill at introspection.
ACHIEVING EMOTIONAL CONTROL
What does it mean to achieve emotional control? It does not mean, in my view, to repress
all emotion, that is, to give a standing order to one ’s subconscious not to allow any aware-
ness of emotion to enter conscious awareness. This would be disastrous psychologically, as
noted earlier.
Emotional control, as I view it, involves fi ve elements:
1. Identifying, that is, naming your emotions – not every single one because that would
occupy all your time but those which are most intense and/or enduring. This alone
can enhance some feeling of control, because naming emotions makes them less
mysterious.
2. Identifying their causes. This includes positive emotions. If you know what brings
you pleasure or happiness, you can take steps to expose yourself to the same object
(assuming it is not harmful like smoking). For example, if you know what parts of
your job you like the most, you can try to build more of those tasks into your job.
This helps control your mood in a positive way. But usually when people talk of
emotional control, they refer to negative emotions. They mean things like not losing
your temper or not being overwhelmed by panic or anxiety. Emotional responses
can become habitual through repeated experiences (some going back to childhood).
Nevertheless, their causes can be grasped.
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153 ATTAIN EMOTIONAL CONTROL BY UNDERSTANDING WHAT EMOTIONS ARE
3. Changing the causes when necessary. If the emotion is negative, you have three possible
ways to intervene (object, cognition, values). You can change or avoid the objects, cor-
rect mistaken beliefs, and modify inappropriate values. As noted, the more strongly
automatized they are and the more subconscious layers involved, the more diffi cult
the change process.
4. Consciously and rationally choosing what action(s), if any, to take based on or
regardless of your emotions.
5. Suppressing emotions, or actions based on them, when necessary . Suppression is different
from repression. Repression is subconscious and based on an implicit standing order to
the subconscious ( “ Don’t let me feel X ” ). Suppression is conscious. It involves deliber-
ately inhibiting an emotion (or an action based on it) because experiencing it or acting
on it is not appropriate in a given context (e.g. it may be distracting or there may be
conduct norms that it is important to honor). When analyzing emotions it can be very
helpful to write down one ’s observations, for example what emotion(s) one is feeling, the
causal elements, the action tendencies and action choices, the errors one ’s subconscious
may have made, etc. This makes the emotion more objective and helps one to slow
down one ’s mental processes so that one can understand what has happened.
CASE EXAMPLES
Mark
Let ’s begin with a negative example. Mark is a unit manager for a Fortune 1000 company.
Since receiving his MBA from a high prestige school, Mark has received two promotions.
Given his background he believes that he will surely become CEO of his company, or, if
not, of another Fortune 1000 company. However, he is having a hard time mastering his
present job which is highly technical – nothing like the cases he studied in his MBA classes.
He is feeling self - doubt, a threat to his self - esteem, and he can’t stand the feelings of anxiety
that are the result of this doubt. Further, not being able to master something easily threat-
ens his self - image as a brilliant person. He could study the technical aspects of his job
more thoroughly, but this would imply that he cannot master things in a fl ash which his
self - image requires. So he tries desperately to work “ around ” his ignorance. He delegates
some of the work but to people who know less than he does. He tries to bluff his way
through meetings. When glitches occur, he angrily blames others, even though at some
subconscious level which he will not make conscious, he knows that he is the one to blame.
When his boss inquires about problems, he evades giving straight answers and assures his
boss that things will be taken care of. Eventually things get more and more out of control
and Mark has to rely increasingly on outright lies and then more lies to cover up those lies.
Gradually, his projects fall apart and he gets caught lying, because he can no longer recall
which lies he told to which person. In the end he is fi red; his career, for now, is in tatters.
Imagine the difference in the outcome if Mark had honestly and openly identifi ed his
initial self - doubt and its cause: “ I don’t know how to do this job, and I feel inadequate and
scared. I am trying to live up to a self - image which maybe is not a rational one. ” Then he
could have chosen what to do, for example seek therapy, consult experts, study on his own,
get more training, ask his boss for advice, etc. The outcome could have been quite different
if he had not evaded and let his unidentifi ed emotions control him.
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154 E DWIN A. LOCKE
Sandra
Now let ’s consider a real case sent to me by an acquaintance (with details changed to
preserve anonymity). Sandra works as a manager in the software industry. She fi nds that
introspection “ is indispensable for running effective meetings. For instance, I have often
been in meetings where people ‘ admit to a certain deception’ such as being much far-
ther behind in a project than they have been letting on. ” Her immediate reaction in this
situation is anger and she knows the source: “ It is unjust that this person misled me. At
this point it is necessary to first let go of the anger [suppression] and be able to have
enough concentration to determine what is the correct response ” (consciously choosing
what action to take). She goes on, “ I might even need to take into account future needs
such as ‘ I need to set an example ’ ” so that others don’t explode in anger when things
go wrong. “ Then I must decide how much emotion I want to express. How will each
person at the meeting react to my reaction? For a while I thought that this whole proc-
ess was itself a deception, but I realized that a good manager needs to be in control of
their emotions and needs to be cognizant of the emotional responses of the people who
work for them. ”
A manager must show self - control or the employees will think they are living in an
unpredictable, irrational universe. In addition to understanding her emotions, Sandra had
to do two things in a situation like this: (1) make clear that dishonesty was unacceptable
and (2) make it safe for people who have problems to admit them (but insist that it be
done sooner).
Observe how many smart things Sandra did. First, she identified her emotional
response (anger). Second, she identified its cause (injustice). Third, she thought about
the proper response and realized that anger would be unwise and suppressed that
impulse. Fourth, observe that her ability to introspect allowed her to empathize with
others: she could foresee how others might react to her anger if it were extreme. That is
why she suppressed it. Fifth, she used reason to decide exactly what she needed to com-
municate and how. (Incidentally, a precondition of empathy is understanding one ’s own
emotions.)
AUXILIARY ISSUES IN EMOTION
Is there such a thing as emotional intelligence (EI)?
In short, no (see Locke, 2005 ). EI has been defined in so many ways and has so many
components (on which advocates do not even agree) that it is literally unintelligible.
Intelligence is the capacity to grasp abstractions, but you do not need a high IQ to intro-
spect about your emotions. The best terms for what I have been talking about are skill at
introspection and the willingness to use that skill. [ In a recent article, Mayer, Salovey and
Caruso ( 2008 ) admit the term has been defi ned too broadly, but I believe even their narrower
definition is too broad. Furthermore, they end up characterizing EI as an ability, which is
basically the same as skill, which means there is no need for the term intelligence here at
all.] There is no doubt that introspective skill could be taught and that existing and would -
be managers could benefit from such training. This is not to say that introspection is the
most important managerial skill (I don’t think it is), but it is a very useful one for reasons
which I think I have made clear.
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155 ATTAIN EMOTIONAL CONTROL BY UNDERSTANDING WHAT EMOTIONS ARE
Emotional experience vs emotional expression
In the literature emotional expression is called emotional “ display ” but that sounds rather
like making emotions into a peacock. As noted from the last case, sometimes it is best to sup-
press the overt expression of an emotion so as not to unduly upset others in the workplace.
Here is the way to deal with justifi ed anger without acting too angrily. From manager to work
team (let ’s assume it is still Sandra speaking): “ I have just learned that all the sub - tasks for our
project X are behind schedule, even though I have been assured for the past several weeks
that everything was on target. Let me say that this makes me quite angry for two reasons.
First, I think I have been deceived. Maybe you were afraid I would blow up at you, but even
if that were true (which it is not), how does it help to deny reality? It just makes the mess
worse. From now on, I want you to tell me if you are having problems right away, and we
will work to solve it. If you fail to do this in the future, I will assume you are lacking in moral
integrity and will act accordingly. Second, because I was not kept informed, we may end up
hurting our reputation with the customer and that reflects badly on us and our company.
Now let ’s discuss how to insure better information exchange and then how to fix this project. ”
The proper tone here would be serious and stern but not enraged or intimidating.
It is clear that the manager is angry, and she has identified but has not lost control of her
anger. Further, she has explained the reasons for the anger and suggested specific actions that
should be taken next.
What if the emotion is positive, for example the company or unit just got a new, much
desired contract or other good news? Here is a real life example from Mickey Dresser, CEO
of retailer J. Crew (and formerly of The Gap from which he was fired; Brodie, 2008 , p. 56).
Mickey likes to use a public address system to communicate with employees. One day in the
middle of lunch he was patched through to the office PA system to give this message:
Hi, everyone, it ’s Mickey. I ’ m at Koi [a restaurant], waiting to meet my son for lunch,
and I ’ m seeing a woman wearing our Florentine - print dress. Her friend just asked her
where she got it. She said, “ J. Crew. ” It ’s going to be a great lunch!
Dresser was clearly expressing excitement and joy based on the anticipation of great sales
and wanted to share his feelings with his employees. One can guess that most employees
were pleased by this announcement. This brings us to another point.
The effect of the manager on the mood of the office
Because managers are in a position of power (see Chapter 19 ), they can infl uence the
mood of the whole office, especially the mood of people they come into direct contact
with (maybe through email too). An angry, condemning mood will incite anxiety and
fear in others, because the manager will be seen as a threat (even without making specifi c
threats). In contrast, a manager who projects a benevolent mood will create a happier
atmosphere. Of course, a manager has to be businesslike but this is not incompatible with
a pleasant demeanor. This issue brings up another one.
Should you fake emotions?
I agree with those who say: No (e.g. see Grandey, 2008 ). Employees can readily spot emotions
which are not authentic. But how then can you set the mood of the office? Part of the
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156 E DWIN A. LOCKE
answer lies in selection. Organizations should not choose people as managers who are not
nice people (though obviously niceness is far from the only requirement). Some people are
temperamentally (and ethically) unsuited to manage other people. But let ’s say you have
personality problems and yet want to set a positive tone with your subordinates.
The first step would be to identify why your mood is predominantly negative; fi xing
this might require professional help. You may hold subconscious premises (e.g. no one can
be trusted, people are out to get me) that could be changed. (In some cases medication
may be called for as well.)
The next step would be to learn interpersonal skills – that is, appropriate ways of
behaving with others regardless of your emotional impulses. For example, if you are
angry that a subordinate has done a bad job, you can learn specific steps to follow to deal
with the problem without blowing up, as noted in some earlier examples. Further, you can
learn how to encourage subordinates and praise them for doing good work (Chapter 13 ).
You can also learn how to listen, a skill that too many managers lack. You can apply these
skills whether or not your emotions are pushing you in the right direction at a given time.
(Many executives today have personal coaches who can help them learn these skills.)
Both these steps refl ect aspects of emotional control .
In addition, you can make sure you are a person of outstanding moral character
since character is within the realm of one ’s choice (see Chapter 20 ). This will build trust
between you and your subordinates which helps foster high morale, providing you are also
competent (see Chapter 21 ).
What about customer service personnel?
It is generally agreed that being a customer service representative is a stressful job, especially
when it involves constantly dealing with complaints. The service reps get the brunt of the
anger, because they are symbols of the whole company.
The first step is again selection: choose people who like this type of work. The second
step involves a secret about emotions that 99% of customer service reps do not seem to
know – it concerns how to deal with customers ’ anger. Most reps respond to anger or
grumpiness (based on hundreds of examples from my personal experience) either by totally
ignoring, i.e. by total silence, or by asking: “ So what can I help you with? ” or by defensive-
ness ( “ Don ’ t blame me ” ). Usually, this simply increases the customer ’s anger.
Here is the secret: you have to disarm the anger by acknowledging it and even empathizing
with it, namely: “ I ’ m so sorry for the poor service (product, etc.). I don’t blame you for
feeling disappointed (frustrated, angry). ” Because the customer feels understood emotionally,
the result is that he or she virtually always calms down and becomes less moody.
Burnout
Burnout means that you no longer enjoy your job and lack enthusiasm for it. There can
be many reasons for this which you can discover by introspection, for example you never
really wanted to be in this type of job in the first place (you chose it based on status or
pressures from others or because it was the “ in ” career at the time, for example law); the
job does not allow you to grow in your knowledge and expertise (you are stagnating);
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157 ATTAIN EMOTIONAL CONTROL BY UNDERSTANDING WHAT EMOTIONS ARE
the job entails never- ending and unresolvable conflicts with others; the people you work
with are mean, incompetent, and/or dishonest; the job was not what you expected and
desired; stress on the job is unrelenting and you see no way to increase your self - effi cacy
enough to moderate it (Chapter 27 ), etc. The solution to burnout is usually a job or career
change, ideally after you have had time off to refl ect on what you want.
Defensiveness
Defensiveness involves trying to protect oneself against perceived attack or criticism.
Specifically, what one is trying to protect is one ’s sense of self - esteem (which may be fragile).
Common mechanisms of defense are rationalization (making excuses), denial ( I didn’t do
it), and evasion (refusing to consider the issue). The danger of defensives is that it detaches
the mind from reality and thereby makes the problem impossible to fi x.
One of my business heroes in this respect is Ken Iverson, the late CEO of Nucor. Early
in its history (after Iverson took over) the company was not doing well and a stockholder
complained at the annual meeting. Iverson did not get defensive. His response was “ What
can I say? We’re a lousy company.” Of course, Iverson, unburdened by any desire to fake
reality, went on to make Nucor one of the best steel companies in the world. Legendary
investor Warren Buffett has the same attitude. When his company has a (rare) bad year, he
simply says they did a poor job.
The key principle to sustain high self - esteem and prevent defensiveness is: treat reality
( facts) as an absolute. Former GE CEO Jack Welch said that you must face reality as it is,
rather than as you want it to be. If you want to change what is (e.g. poor past performance),
you have first to acknowledge the facts in front of you, including your own mistakes. Then you
are in a position to fi x them.
Note that this policy eliminates the need for defensiveness, because your self - esteem
is secure when reality rather than wishes come first. There is no illusion of self - esteem to
protect.
IS THE CORE ROLE OF THE LEADER EMOTIONAL OR RATIONAL?
A substantial segment of the leadership literature stresses or implies that the main role of
the leader is that of motivator of employees. Although this is one role, I believe that it is
not the main one and that focusing too heavily on the emotional aspect is very dangerous.
The most important trait of a great leader (over and above ability and integrity),
I believe, is rationality. (Buffett says this is also the most important trait in a successful inves-
tor). Why rationality? Because virtually every decision a leader makes has to be based on
looking at the facts, rationally integrating them and drawing conclusions. Many thousands
(if not tens of thousands) of decisions have to be made (with or without others ’ input)
in order to run a successful business (see Introduction, this volume). These include: what
products (and product attributes) to make; where and how to make them; what people to
hire and how to assign responsibilities; discovering a competitive strategy; fi nancing the
enterprise; managing risk; understanding the law and the economy; projecting trends into
the future; anticipating threats; balancing the short term and the long term; constantly
changing the organization to meet changing conditions, etc. And this only scratches the
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158 E DWIN A. LOCKE
surface. Decision making is hard mental work (Chapter 25 ). Leading a company requires
a never- ending process of thinking. Motivating people to work hard at doing the wrong
thing only hastens the organization’s destruction. Thus cognition must come before
motivation.
Consider how many thousands of very hard working and emotionally passionate
people were involved in America ’s current housing/financial crisis – but they were making
a deluge of wrong decisions (the government ’s key role in starting the whole mess, for
example the Fed ’s excessively low interest rates and the creation of Freddie Mac and
Fannie Mae to push high risk loans and buy high risk securities notwithstanding).
One of the few top 20 banks that did not deal in subprime loans or invest in high
risk securities was BB & T, a mid - Atlantic regional holding company (see Chapter 20 , this
volume). Its core value: rationality. Its CEO told me a long time before the blow- up
that what the large banks were doing was irrational. They were making huge short - term
profits, undoubtedly accompanied by soaring positive emotions, but the house of cards
soon collapsed.
Emotion is no substitute for rationality.
Emotions about one ’s job and career as a source of life happiness
Most people spend a substantial part of their lives at work. Thus it is important that, if
possible, they pick a job or career that they personally like, preferably love. In times of
financial crisis, people can be forced to take jobs that are less than satisfactory but this
should not stop them from looking for something better – even during mid - life or later.
To do this they have to identify what they really like based on trying different things and
then introspecting – and then acting. Pleasurable jobs entail mental challenge (Chapter
6 ), doing something one loves, and steady progress in building one ’s knowledge and
expertise.
One of the most common tradeoffs people have to consider is money vs the job itself
(i.e. the nature of the work). The work that you like the most may not be the type that
pays the best. Another is career vs. family. Usually one cannot maximize everything.
Again it is important to introspect to identify one ’s true value hierarchy. But existing
value hierarchies don’t have to be permanent. They can be chosen – and changed by a
process of thought. By choosing and pursuing the right values (including those outside
of work) and understanding their relationship to emotion, one can be the agent of one ’s
own happiness.
CONCLUSION
In order not to be the helpless victim of one ’s emotions, one has to understand their
causes. Even though emotions are automatic responses programmed by the subcon-
scious, their causes can be identified and understood. Moreover, emotions can be
changed by changing their causes. Further, one has a choice as to how one acts in
the face of emotions. There is no innate conflict between reason and emotion. A
key to happiness and the harmony of reason and emotion is good introspection.
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159ATTAIN EMOTIONAL CONTROL BY UNDERSTANDING WHAT EMOTIONS ARE
REFERENCES
Arnold , M. B. ( 1960 ). Emotion and Personality , Vol. l . New York : Columbia University Press .
Binswanger, H. ( 1991 ). Volition as cognitive self - regulation . Organizational Behavior and
Human Performance, 50 , 154–178 .
Brodie , J. ( 2008 ). King of Kool . Fortune , September 1, pp. 51–61 .
Butler, A. C. , Chapman , J. E. , Forman , E. M. , and Beck , A. T. ( 2006 ). The empirical status
of cognitive - behavioral therapy: A review of meta - analyses. Clinical Psychology Review,
26 , 17–31 .
Clark , D. A. , and Beck , A. T. ( 1999 ). Scientific Foundations of Cognitive Theory of Therapy and
Depression. New York : Wiley .
Grandey , A. A. ( 2008 ). Emotions at work: a review and research agenda . To appear in
C. Cooper and J. Barling (eds), The SAGE Handbook of Organizational Behavior , Vol. 1 ,
pp. 234–261 . Thousand Oaks, CA : Sage.
Humphrey , R. H. ( 2008 ). Affect and Emotion. Charlotte, NC : Information Age publishing.
Locke, E. A. ( 2005 ). Why emotional intelligence is an invalid concept . Journal of Organizational
Behavior, 26 , 425–431 .
Locke, E. A. (2009). It ’s time we brought introspection out of the closet . Perspectives in
Psychological Science, 24–25 .
Mayer , J. D., Salovey , P. , and Caruso , D. R. ( 2008 ). Emotional intelligence . American Psychologist,
63 , 503–517 .
Peikoff , L. ( 1991 ). Objectivism: The Philosophy of Ayn Rand. New York : Dutton .
EXERCISES
Analysis of personal emotions
Divide into small groups. Each group member, working alone at first, is to identify an
emotion that he or she felt at one time on a job. Name the emotion. Identify the relevant
object or objects, the relevant cognitions (beliefs, thoughts) and the nature of the value
appraisal(s) that caused the emotion. Each member then presents his or her analysis to
the other group members. One member from each group could be elected to present one
example to the whole class, if they are willing.
Changing an emotion
Divide into groups. Each member, working alone, identifies a “ problem emotion or emo-
tions ” – an inappropriate past emotion or a pattern that he or she would like to change.
Each identifies ways in which they could change the object (in the future), correct erron-
eous beliefs, and/or modify value standards. Identify problems they might encounter doing
this, for example defensiveness, discouragement, self - image, diffi culty with introspection.
Have each member perform mental experiments to anticipate how changing one or more
of the three causes could change the emotion. If any member is willing, one example could
be reported to the whole class. ( Instructor should strongly urge any member suffering from depression to seek
)professional help.
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c09.indd 161 6/17/09 6:44:02 PM
9
Motivate Employee Performance
through Goal Setting
GARY P. L ATHAM
Goal setting theory (Latham and Locke, 2007 ) provides a framework that specifi es the
most valid and practical ways of increasing employee motivation. This conclusion has
been reached by multiple authors working independently (e.g. Earley and Lee, 1992 ;
Miner, 1984 ; Pinder, 2008 ). The conclusion is based on the fact that the theory has been
shown in more than 1000 studies to predict, influence, and explain the behavior of thou-
sands of people in numerous countries (e.g. Australia, Canada, the Caribbean, England,
Germany, Israel, Japan, and the USA), in both laboratory and field settings, involving
more than 100 different tasks in occupations that included logging, word processing,
engineering, and university scholarship (Locke and Latham, 1990 ; Mitchell and Daniels,
2003 ). Although developed as a theory of motivation in the workplace, it has been used
effectively in sport psychology (Weinberg, 1994 ). The theory has even been found use-
ful for promoting the motivational processes of brain - injured patients (Gauggel, 1999 ;
Prigatano, Wong, Williams, and Plenge, 1997 ).
MAIN PRINCIPLE
The theory states that the simplest, most direct motivational explanation of why some
people perform better than others is because they have different performance goals
(Latham and Locke, 1991 ). The essence of the theory is four- fold (Locke and Latham,
1990 ). First, diffi cult specific goals lead to significantly higher performance than easy
goals, no goals, or even the setting of an abstract goal such as urging people to do their
best. Second, holding ability constant, as this is a theory of motivation, and given that
there is goal commitment, the higher the goal the higher the performance. Third, person-
ality traits and incentives influence an individual ’s behavior, at least in part, to the extent
that they lead to the setting of and commitment to a specifi c difficult goal. Fourth, goal
setting, in addition to affecting the three mechanisms of motivation, namely, choice, effort,
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162 G ARY P. LATHAM
and persistence, can also have a cognitive benefit. It can influence the motivation to dis-
cover ways to attain the goal (Seijts and Latham, 2005 ).
SUBPRINCIPLES
There are at least four subprinciples necessary for deriving the motivational benefi ts of
goal setting. The goal must be challenging and specific, feedback must be provided on
progress in relation to goal attainment, ways must be found to maintain goal commitment,
and resources must be provided for and obstacles removed to goal attainment.
Set challenging specific goals
The goal must be both challenging and specific. Given adequate ability and commit-
ment to the goal, the higher the goal the higher the performance. This is because people
normally adjust their level of effort to the difficulty of the goal. In addition to being
targets to attain, goals are the standards by which one judges one ’s adequacy or suc cess.
Challenging goals facilitate pride in accomplishment. People with low goals are mini -
mally satisfied with low performance attainment, and become increasingly satisfi ed with
every level of attainment that exceeds their goal. This is also true for individuals with a
high goal. To be minimally satisfied, they must accomplish more than those who have
a low goal. Consequently, they set a high goal to attain before they will be satisfi ed with
their accomplishment. In short, to be satisfied, employees with high standards must accom-
plish more than those with low standards. In addition, an employee ’s outcome expect-
ancies are typically higher for the attainment of high rather than low goals because the
outcome one can expect from attaining a challenging goal usually includes such factors
as an increase in feelings of self - efficacy, personal effectiveness, recognition from peers, a
salary increase, a job promotion, etc. As a result people, in most instances, readily commit to
a high goal if they believe they have the ability to attain it.
Goal specificity facilitates an employee ’s focus in that it makes explicit what it is the
individual should choose to do or try to accomplish. If the goal specifies A, then B and
C will be downplayed. Specificity also facilitates measurement or feedback on progress
toward goal attainment. A drawback of an abstract goal such as “ do your best ” is that
it allows people to give themselves the benefit of the doubt concerning the adequacy of
their performance (Kernan and Lord, 1988). Thus their maximum effort is not aroused.
For feedback to be used intelligently, it must be interpreted in relation to a specifi c goal.
Goal specifi city clarifi es for employees what constitutes effective performance.
For goal setting to be maximally effective, the goal and the measure of performance
effectiveness used must be aligned. Thus, if a logging crew wants to increase productiv-
ity by 15%, the performance measure must be the number of trees cut down divided by
the hours worked. If the director of an organization’s RandD division wishes to increase
line managers ’ satisfaction with the unit, the goal set can be a specific increase in the fre-
quency of behaviors emitted that have been identified through job analysis as necessary
for line management ’s satisfaction. Goals and the measures of their attainment that have
appeared in the scientific literature include physical effort, quantity and quality measures
of production, costs, profi ts, and job behaviors.
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163MOTIVATE EMPLOYEE PERFORMANCE THROUGH GOAL SETTING
Challenging, specific goals affect effort and persistence (Latham and Locke, 1991 , 2007 ).
When no time limits are imposed, a specific high goal induces people to work harder or
longer than is the case when a low or abstract goal is set. Without time limits, a specifi c
high goal induces people to work until the goal is attained. With time limits, diffi cult spe-
cific goals lead to more effort per unit of time. The American Pulpwood Association found
that when paper companies impose quotas on the number of days that they will buy wood
from pulpwood crews, the crews cut as much wood in the restricted number of days as they
do in a normal five- day work week (Latham and Locke, 1975 ).
In summary, setting specific challenging goals is important for increasing both job per-
formance and job satisfaction. Job satisfaction is the result of an appraisal of one ’s
performance against one ’s goals. Job satisfaction is not a result of the person alone or the
job alone, but of the person in relation to the job. To the extent that one ’s job perform-
ance is appraised as fulfilling or facilitating the attainment of one ’s goals, satisfaction is
high (Latham and Brown, 2006 ; Latham, Locke, and Fassina, 2002 ). For example, in a
study conducted in Germany, there were no data to suggest that those who had high goals
experienced feelings of exhaustion. Only those employees who perceived their goals were
difficult to attain experienced an increase in positive and a decrease in negative effect,
an increase in job satisfaction, and perceptions of occupational success over a three - year
timeframe. An unexpected finding was that lack of goal attainment in one ’s personal life
was related to higher degrees of subjective well - being when the person experienced goal
progress on the job (Wiese and Freund, 2005 ).
Provide feedback in relation to goals
A truism attributed to the late Mason Haire is “ that which gets measured gets done. ” This
is because the act of measurement conveys cogently what the organization truly values ver-
sus what it may state that it values. However, the accuracy of Haire ’s statement is improved
through the insertion of the word goals: that which is measured in relation to goals is done.
Both goal setting theory and empirical research indicate that in the absence of goal setting,
feedback has no effect on performance. This is because feedback is only information; its effect
on action depends on how it is appraised and what decisions are made with respect to it.
For example, the Weyerhaeuser Company found that engineers and scientists who were
urged to do their best after receiving a performance appraisal performed no better than
their counterparts in a control group. A significant increase in performance occurred only
among those engineers and scientists who received feedback in relation to specifi c high
goals (Latham, Mitchell, and Dossett, 1978 ).
Feedback moderates the effect of goal setting. Without feedback, the positive benefi t of
goal setting is minimized (Erez, 1977 ). This is because goals direct effort and persistence.
Feedback allows people to discern what they should continue doing, stop doing, or start
doing to attain the goal.
Gain goal commitment
Commitment is the sine qua non of goal setting. Without it, goal setting is a meaningless
exercise. Two primary ways to gain commitment are to focus on an individual ’s outcome
expectancies and self - efficacy (see Chapter 10 , this volume) .
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164 G ARY P. LATHAM
A downside of setting challenging specific goals is that people may obtain tangible evi-
dence that they did not attain them. A teenager may have test scores that provide strong
evidence of failure in math. An employee in a consulting firm may have hours and hours
of wasted effort, non - billable hours, on a potential client who subsequently took the busi-
ness to a competitor. The result can be feelings of loss of control. People learn on the basis
of evidence (e.g. revenue, client surveys, staff turnover) that they have failed to attain their
goal no matter how much they truly tried to attain it. Through such repeated experiences
they typically “ learn ” to give up; they learn helplessness. Thus there are employees who
have learned that they cannot increase revenue from existing clients, they have learned
that they are poor at bringing in new clients, and that they are not able to work effectively
with staff. They have tangible evidence to support their conclusions that they should give
up their attempts to attain their goal.
The solutions for maintaining goal commitment are at least two - fold. A fi rst step,
as noted above, is to focus on outcome expectancies. The role of a coach is to help people
see the relationship between what they do and the outcome of their actions; to help
people realize the outcomes that they can expect as a result of what they do. An early
example of how outcome expectancies affect goal commitment can be found in a study by
Lashley ( 1929 ). A man, after 900 repetitions, was still unable to master the alphabet. But
after he was offered 100 cigarettes if he could learn the alphabet in a week, he proceeded
to do so in only 10 trials.
Because the concept of outcome expectancies is as useful in one ’s personal life as it is
in an organizational setting, allow me to share a personal example. I arrived home one
day to discover my four children on the front step. They greeted me with the warning
not to enter the house as Mom was in a horrific mood. As she had walked across the
kitchen fl oor, her foot had come out of a shoe that had stuck to dried milk. As she fell, her
hand braced her from injury as it slipped into an open dishwasher that oozed with leftover
breakfast food.
To announce that I will solve the problem would not only have been lunacy on my
part, it would have fostered dependence: “ Let ’s wait until Dad gets here; he can fi x any-
thing. ” To look for blame would have been equally fool - hardy on my part: “ So what did
you do to get your mother in such a bad mood? ” “ I don ’ t know. ” “ It wasn ’ t me. ” “ She is
always in a bad mood. ” I bet you did something, Dad. ”
The primary job of a coach is to improve performance rather than focus on blame.
This is done through increasing the person’s sense of control regarding the attainment
of their goals. It is done by helping people to realize the outcomes they can expect from
engaging in specific actions. Thus, I simply asked each of them: “ What can you do within
the next 30 seconds to improve Mom ’s mood? ” Setting a goal focuses attention on discov-
ering solutions to its attainment.
One son offered to clean the kitchen, another said he would get us both a drink, the
third said he would make dinner. My daughter quietly ran off to prepare a bath for my
wife. The outcome, as expected, was a dramatic upswing in my wife ’s affect and behavior.
A four cell empathy box can be used to understand: (1) the outcomes an employee
expects from committing to a goal, (2) the negative outcomes expected from goal com-
mitment, (3) the positive outcomes expected from sticking with the status quo, and (4) the
negative outcomes expected from doing so. Understanding outcome expectancies enabled
a forest products company to shift the dishonest (theft) to honest behavior in the workforce
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165 MOTIVATE EMPLOYEE PERFORMANCE THROUGH GOAL SETTING
Outcome Expectancies
Positive Negative
Goal
Commitment
Goal Rejection
1? 2?
3? 4?
5?
FIGURE 9.1 The empathy box
(Latham, 2001 ). The empathy box is shown in Figure 9.1 . The fi ve questions asked
are as follows: (1) What positive outcomes do you expect from committing to and pursu-
ing the goal? (2) What negative outcomes do you expect from committing to and pursuing
the goal? (3) What positive outcomes do you expect from rejecting or ignoring the goal?
(4) What negative outcomes do you expect from rejecting or ignoring the goal? (5) What
would have to change for you to commit to the goal (look for answers in cells 2 and 3)?
This empathy box provides a systematic way to “ walk in another person’s shoes. ” To
the extent that you understand the outcomes an individual or team expects, you will begin
to understand their behavior. To the extent that you are able to change the outcomes they
expect, you will be able to change their behavior – given the person or team has the confi -
dence they can do so. This leads us to the second concept, self - effi cacy.
A second step to maintaining goal commitment is to increase the person’s self - efficacy
(Bandura, 1997 ; 2001). Self - efficacy is the conviction that one can mobilize one ’ s resources
to attain a specific performance level. “ I can cause . . . , I can bring about . . . I can make
happen. . . . ” Self - efficacy is different from self - esteem in that the latter refers to judgments
of self worth: How much does Pat like Pat? Further, self - esteem is a general trait where as
self - effi cacy is task specifi c. The two are not necessarily directly related.
Pat may have low self - esteem due to a variety of events that have occurred in Pat ’s
past. Pat has said and done things that are deeply regretted. For these reasons no one dis-
likes Pat today more than Pat. Nevertheless, Pat believes (high self - effi cacy) that there is no
one who is as effective in bringing in new business to the firm. Conversely, Pat may love
Pat, yet she may have low self - efficacy in the ability to make a persuasive presentation to a
potential client. Furthermore, because self - efficacy is task specific, an individual may have
high self - effi cacy on ability to work effectively with staff, low self - effi cacy on working effec-
tively with clients, and moderate self - effi cacy on ability to work effectively within the fi rm.
c09.indd 166 6/17/09 6:44:05 PM
166 G ARY P. LATHAM
People who have problems with self - esteem should be referred to a clinical psychol ogist.
People who have low self - efficacy for attaining a specific, high goal can be coached by you
in the workplace.
Bandura ( 2001 ) has shown that it is not just our ability that holds us back or propels
us forward, it is also our perception of our ability. People with low self - efficacy look for
tan gible evidence to abandon a goal. A failure is confirmation that it is useless to persist
in goal attainment. Conversely, people with high self - efficacy commit to high goals. They
view obstacles and setbacks to goal attainment as challenges to overcome, as sources of
excitement to be savored.
A possible indicator of low self - efficacy is self - denigration of one ’ s ability. Statements
such as “ I can’t deal with a personal computer ” may indicate low self - effi cacy.
High self - efficacy can be induced in the workplace in at least three ways, enactive
mastery, modeling, and persuasion from a significant other. Enactive mastery involves
sequencing a task in such a way that all but guarantees early successes for an individual.
For example, to increase confidence in the use of a laptop, the following steps should be
followed: (a) open/close, (b) on/off, (c) keyboard skills, (d) save. Early successes through
“ small wins ” build confi dence that “ I can do this, my goal is indeed attainable. ”
An effective coach does not abandon an employee during the early stages of learn -
ing to attain a goal. To leave the employee to master keyboard skills before teaching the
process of “ save” is to provide the employee with a reason for abandoning the laptop in
favor of pen and paper. All that was typed is lost forever when the laptop is turned off
in the absence of knowledge of the necessity to “ save. ”
The concepts of outcome expectancy and self - efficacy are often applied together. If the
person hates the traditional “ snail ” mail system, show how hitting a key on the computer
will send material any place in the world in seconds. In short, enable the person to see
the relationship between mastery of the laptop and the desired outcome the person can
expect. Then give the person confi dence to do so through the sequencing of the tasks.
A second way to increase self - efficacy regarding goal attainment is through the use of
models. The job of coach is to find people with whom the goal setter identifi es, who have either
mastered the task or are in the process of doing so. Note that the word identifies is italicized.
Directing a manager who is struggling in the development of staff to another manager who
has the “ magic touch ” with staff may not increase self - efficacy. It may even backfire as a
coaching technique if this is all that is done. The person who is struggling may give up after
concluding that “ I will never acquire that ‘ magic touch ’ . ” Directing this manager to visit an
additional colleague who has struggled recently in the past, and has subsequently improved
the performance of staff, is more likely to increase the belief that “ if she can, so can I. ”
For the same reason, visiting a benchmark company can sometimes be a demotivat-
ing experience. The idea underlying benchmarking is to minimize reinventing the wheel
on the part of people in other organizations. Through benchmarking, the acquisition of
knowledge is accelerated. But, the downside of benchmarking is that visitors can leave full
of admiration for what they have witnessed, and demoralized because they are convinced
that they do not have the ability to model it: “ Their management system is different from
ours. Their union contract is nothing like ours. There is no way that we can be like them. ”
To increase their self - efficacy you must find an organization, in addition to the one that
will be used as a benchmark, with whom employees can identify – an organization that has
previously done poorly but has significantly improved its performance relative to
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167 MOTIVATE EMPLOYEE PERFORMANCE THROUGH GOAL SETTING
that benchmark, or is in the process of doing so. Finding and visiting this additional
organization increases the belief that “ if they can, so can we. ”
The American Pulpwood Association found that supervisory presence and support is also a
key to goal commitment and productivity (Ronan, Latham, and Kinne, 1973 ). When the
goal is assigned by a supportive authority figure, goal commitment and performance are
high (Latham and Saari, 1979a ). These findings are supported by a meta - analysis that
showed a 56% average gain in productivity when management commitment to a MBO
program is high versus a 6% increase when their commitment is low (Rodgers and Hunter,
1991 ). Thus, it is not surprising that Bandura (see Chapter 10 ) found that a third way of
increasing self - efficacy is through persuasion from a significant other. People tend to behave
in accordance with the expectations of those people who are significant to them. Assigned
goals themselves usually lead to high goal commitment because listening to the assignment
without objection is in itself a form of consent (Salancik, 1977 ). Assigning the goal implies
that the recipient is capable of attaining it, which in turn increases the person’ s self - effi cacy
regarding the task.
Bandura, a past president of the American Psychological Association, and a past hon-
orary president of the Canadian Psychological Association, addressed a classroom of
executives as follows:
We know that intelligence is fixed. You either have it or you don’t. We are going to
put you through a simulation consisting of tasks that you typically confront as CEOs.
I know you will fi nd these tasks frustrating and seemingly impossible.
In an adjoining room, he addressed the other half of the class of executives as follows:
We know that intelligence is not fixed. Intelligence is the ability to apply what you
have learned on previous tasks to present ones. We are going to put you through a
simulation consisting of tasks that you typically confront as CEOs. I know that you will
fi nd these tasks challenging and fun.
Several hours later he pushed back the dividing wall. The people in the second group
were laughing among themselves as to how similar the simulation was to their daily work
lives, and how much they had learned from their experiences that afternoon. The people
in the first group were truly angry and frustrated. They demanded to be allowed to go
through the same simulation as the second group before their four weeks of executive
education at Stanford came to a close. The simulation that they had gone through, they
claimed, was not similar at all to what they encountered on their jobs, and hence was a
waste of their time.
In short, both groups behaved in accordance with Bandura ’s expectations of them,
despite the fact that the simulation was identical for both groups. In less than a minute,
Bandura ’s expectations of one group of executives ruined their afternoon and for the
other group he had the opposite effect.
A coach may or may not be a significant other for the person who is being coached.
Thus a role of you as a coach is to determine the identity of the person’s signifi cant other,
and have that individual or individuals communicate, if true, why they believe the person
can attain a specifi c high goal.
The most powerful significant other is one ’ s self. Verbal self - guidance (VSG) or functional
self - talk can increase or debilitate self - confidence in goal attainment. We are often our
c09.indd 168 6/17/09 6:44:06 PM
168 G ARY P. LATHAM
worst enemy. Millman and Latham ( 2001 ) trained displaced managers to systematically
monitor their self - talk to exclude negative comments and increase positive ones with
respect to job attainment. Within nine months, 48% of the people who were trained
obtained a job that paid $ 10,000 of their previous job; only one person of eight in the
control group was able to do so. The self - efficacy of the participants in the group who
were trained in functional self - talk was significantly higher than those in the control group.
Similar results have been obtained for Aboriginals in Canada (Latham and Budworth,
2006). Training in VSG also turned highly competitive MBA students into team players
(Latham and Brown, 2006 ).
The order in which these two steps, outcome expectancies and self - effi cacy, should be
implemented varies by individual. If outcome expectancies are already high, this step may
be skipped. Focus immediately on ways of increasing self - efficacy if the person lacks con-
fi dence that the goal is attainable.
Provide resources needed to attain the goal
Goals are unlikely to be attained if situational constraints blocking their attainment are
not removed. Thus the organization needs to ensure that the time, money, people, and
equipment necessary for goal attainment exist. Most importantly the measurement system
must not only allow accurate tracking of goal progress, it must be aligned with and be
supportive of goal attainment.
For example, a newly hired professor may set a goal to receive a mean score of 5 or
higher on a 7 - point scale of teaching effectiveness rated by students. If the measurement
system for promotion and tenure focuses primarily on publications in mainstream aca-
demic journals, and resources are provided primarily for conducting research, commit-
ment to this teaching goal may quickly wane.
Arguably, among the most important resources necessary for accruing the positive
benefits of goal setting is the employee ’s ability. Organizations must provide the neces-
sary training to give people the knowledge and skill to attain the goal. This is because the
relation of goal difficulty to performance is curvilinear. Performance levels off after
the limit of ability has been reached (Locke, Fredrick, Buckner, and Bobko, 1984 ).
Learning vs performance goals
Consistent with the above findings regarding an individual ’s ability are studies by Earley,
Connolly, and Ekegren ( 1989 ) as well as Kanfer and Ackerman ( 1989 ). They found that
when people lack the requisite knowledge to master a task, because they are in the early
stages of learning, urging them to do their best results in higher performance than set-
ting a specifi c difficult goal. The reasons are at least three - fold (Latham, Seijts, and Crim,
2008). First, such tasks are complex for people. Thus the direct goal mechanisms of
effort, persistence, and choice are no longer sufficient to ensure high performance. This
is because people have yet to learn the correct strategy for performing effectively. Second,
such tasks require primarily learning rather than motivation. People have no problem -
solving processes for these tasks to draw upon. Third, people with specific high goals feel
pressure to perform well immediately. As a result, they focus more on their desire to get
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169 MOTIVATE EMPLOYEE PERFORMANCE THROUGH GOAL SETTING
results than on learning the correct way of performing the task. In short, tasks that are
straightforward as well as those that are complex for an individual require attentional
resources, but the resource demands of the latter tasks are greater than those of the
former (Kanfer, 1990 ). Where tasks fall within the problem - solving abilities of people,
as in cases where they have had experience performing the tasks effectively, specifi c dif-
ficult performance goals readily lead to the development and execution of task - specifi c
strategies. Truck drivers at Weyerhaeuser found ways to increase truck loads (Latham and
Baldes, 1975 ) and to decrease truck turnaround time (Latham and Saari, 1982 ) after being
assigned a specifi c difficult goal. They drew upon the knowledge they already possessed to
attain the performance goal.
This was not the case in a study by Winters and Latham ( 1996 ) using a new (for them)
complex class scheduling task developed by Earley ( 1985 ). Winters and Latham found a
deleterious effect of a specifi c, difficult goal for performance because the wrong type of
goal was set. When a high learning goal was set in terms of discovering a specifi c number
of ways to solve the task, performance was significantly higher than it was when people
were urged to do their best or had set a performance outcome goal. This is because a
learning goal requires people to focus on understanding the task that is required of them
and developing a plan for performing it correctly. As Oppenheimer noted during the
development of the atomic bomb, determining how to get to one ’s destination is often
more important than the critical target. Research on goal setting theory shows that high
performance is not always the result of high effort or persistence, but rather high cogni-
tive understanding of the task and strategy or plan necessary to complete it (Seijts and
Latham, 2005). A learning goal is especially beneficial for people who score low on cogni-
tive ability (Latham et al., 2008). As John D. Rockefeller said years ago, a goal of good
management is to show average people how to do the work of superior people. A learning
goal can raise the performance of people who score lower on cognitive ability to that of
those who score higher on cognitive intelligence.
Environmental uncertainty
Among the biggest impediments to goal setting is environmental uncertainty (Locke and
Latham, 1990 ). This is because the information required to set learning or outcome goals
may be unavailable. And even when such information is available, it may become obso-
lete due to rapid changes in the environment. Thus as uncertainty increases, it becomes
increasingly diffi cult to set and commit to a long - term goal.
In a simulation of such a situation, Latham and Seijts ( 1999 ) replicated the fi ndings of
Earley, Wojnaroski, and Prest ( 1987 ) and Kanfer and Ackerman ( 1989 ) using a business
game where high school students were paid on a piece - rate basis to make toys, and the
dollar amounts paid for the toys changed continuously without warning. Setting a specifi c
high performance goal resulted in profi ts that were signifi cantly worse than urging the stu-
dents to do their best. But when proximal performance goals were set in addition to the distal
goal, profit was significantly higher than in the other two conditions. This is because in
highly dynamic situations, it is important to actively search for feedback and react quickly
to it (Frese and Zapf, 1994 ). In addition, Dorner ( 1991 ) has found that performance errors
on a dynamic task are often due to deficient decomposition of a goal into proximal goals.
c09.indd 170 6/17/09 6:44:06 PM
170 G ARY P. LATHAM
Proximal goals can increase what Keith and Frese ( 2005 ) call error management. Errors
provide information to employees as to whether their picture of reality is congruent with
goal attainment. There is an increase in informative feedback when proximal or sub - goals
are set relative to setting a distal goal only.
In addition to being informative, the setting of proximal goals can also be motivational
relative to a distal goal that is far into the future. Moreover, the attainment of proximal
goals can increase commitment, through enactive mastery, to attain the distal goal (Seijts
and Latham, 2005 ).
Stretch goals
Don’t expect people to willingly stretch themselves by committing to a very high goal if
the outcome they expect is criticism for making an error. One or more errors are bound to
occur in the active pursuit of a time - sensitive difficult goal. On tasks that are complex for
people, Frese ’ s research (Frese, 2005 ; Keith and Frese, 2005 ) shows that performance actually
increases if errors are encouraged ( “ the more errors you initially make, the more you learn ” ).
USE THE HIGH PERFORMANCE CYCLE
The usefulness of goal setting theory for everyday applications in work settings is shown in
Figure 9.2 . The high performance cycle (Locke and Latham, 1990 ; Latham et al., 2002 )
or HPC ’s usefulness for motivating employees in the public sector was demonstrated by
Selden and Brewer ( 2000 ). It is a diagnostic tool or framework for understanding why
employees are or are not motivated. For example:
Moderators
Ability
Non-
Commitment
contingent
Task complexity
rewards
Situational constraints
Demands
Challenge,
difficult goals on
meaningful tasks
SatisfactionContingentPerformance
Rewards
in addition to
high self-efficacy
Consequences
Mediators
Organizational
Direction of
commitment and
attention
willingness to
Effort
accept future
Persistence
challenges
Task strategies
FIGURE 9.2 The high performance cycle
c09.indd 171 6/17/09 6:44:06 PM
171MOTIVATE EMPLOYEE PERFORMANCE THROUGH GOAL SETTING
1. Demands
(a) Do people have specifi c high goals?
(b) Are the tasks “ drudgery ” or growth facilitating?
(c) Do people have the confidence so that they can attain the goals set (self - effi cacy)?
2. Moderators
(a) Have people been trained adequately? Do they have the ability to perform the
tasks required of them?
(b) Are they committed to goal attainment?
(c) Do they receive feedback on goal progress?
(d) Do they have the resources to attain the goal or are there situational constraints?
3. Rewards
(a) Are they rewarded for their accomplishments?
(i) Intrinsically?
(ii) Extrinsically?
(b) Are they satisfi ed with their rewards?
4. Attitudes
(a) Are they committed to their organization’s effectiveness?
(b) Are they willing to accept future challenges?
ISSUES IN IMPLEMENTATION
For what should goals be set?
As a theory of motivation, a goal refers to a desired outcome in terms of level of perform-
ance to be attained on a task. Goal content refers to the object or result that is sought after
(Locke and Latham, 1990 ). Thus performance goals should be set for outcomes that are
critical or valued by the individual or the organization in which the person is employed.
An employee may have a career goal, a job goal, a financial goal, as well as psychological
goals including job satisfaction and self - effi cacy. A learning goal should be set for discover-
ing the processes and strategies for reaching a desired outcome when the person lacks the
knowledge to do so. Behavioral goals, identified through a job analysis, are more effective
than a learning goal when the critical behaviors are known (Brown and Latham, 2002). To
set a learning goal in this instance is to encourage paralysis through analysis. Behavioral
goals are especially appropriate for job satisfaction and self - effi cacy.
Because a goal is the object or aim of an action, the completion of a task can be a goal.
As noted by Locke and Latham ( 1990 ), in most goal setting studies the term goal refers to
attaining a specific standard of proficiency on a given task within a specifi c timeframe.
This has resulted in practitioners of goal setting creating the acronym SMART, namely,
goals that are s pecifi c, m easurable, a ttainable, relevant, and have a timeframe (Mealiea and
Latham, 1996 ). The framing of a goal is especially important for implementation with
regard to the stress that it can cause. Frame the goal positively, for example in terms of
something a person can learn to perform well. Don’t frame it negatively, as something a
person may have difficulty attaining. A negatively framed goal ( “ Try not to miss answering
3 of these 15 anagrams ” ) leads to worse performance than a positively framed one ( “ Try
to make words from 12 or more of the 15 anagrams ” ; Drach - Zahavy and Erez, 2002 ;
Roney, Griggs, and Shanks, 2003) .
c09.indd 172 6/17/09 6:44:07 PM
172 G ARY P. LATHAM
Who should set the goals?
A seminal study at the General Electric Company (Meyer, Kay, and French, 1965 ) revealed
that it is not so important who sets the goal as it is that a specific challenging goal in fact be
set. However, subsequent laboratory and field experiments revealed contradictory fi ndings.
Erez and her colleagues (e.g. Erez, 1986 ; Erez and Arad, 1986; Erez, Earley, and Hulin, 1985 )
found that goal commitment and subsequent performance are higher when employees
participate in the setting of the goal than was the case when the goals were assigned.
A series of 11 studies by Latham and his colleagues (e.g. Latham and Saari, 1979a , b; Latham
and Steele, 1983 ) found that when goal difficulty is held constant, goal commitment and per-
formance are the same regardless of whether the goal is assigned or set participatively.
In what is rare if not unique in science, the two antagonists, Erez and Latham, did
a series of collaborative studies, with Locke as a mediator, to discover the basis for their
confl icting findings (Latham, Erez, and Locke, 1988 ). They found that their methodol-
ogy was highly similar in the way in which the goals were set participatively, yet highly
different in the way in which the goals were assigned. In what would be expected, based
on Greenberg ’s organizational justice principles (see Chapter 14 , this volume), when the
assigned goal was given tersely and without any rationale, it had a negative effect on per-
formance relative to participatively set goals. When an assigned goal from an authority
figure included a logic or rationale, it had the same positive effect on goal commitment
and performance as did a participatively set goal. (For an overall summary of the research
on the effects of participation, see Chapter 24 , this volume.)
Subsequent research by Latham, Winters, and Locke ( 1994 ) revealed that Erez had been
correct in arguing the benefi t of participation in goal setting, but for the wrong reason. The
benefit is primarily cognitive rather than motivational. Employee participation in decision
making has a positive effect on performance to the extent that it increases self - effi cacy and
the discovery of task relevant strategies. When this does not occur, when these two variables
are partialed out, participation in decision making has a negligible effect on performance.
Training self - regulation
The management of oneself lies at the core of goal setting theory. Setting a goal and
taking action to attain it is a volitional process. Holding goal difficulty constant, self - set
goals are as effective in increasing performance as are goals that are assigned or set par-
ticipatively (Locke and Latham, 1990 ). This finding is the basis for training people skills in
self - management.
CASE EXAMPLE
The University of Washington
The University of Washington trained their maintenance employees (carpenters, mechanics,
electricians) in self - regulation to increase their job attendance (Frayne and Latham, 1987 ).
The training took place in a group setting one hour a week for eight weeks. In the fi rst ses-
sion, the principles of goal setting were explained to the trainees. In Session 2, the trainees
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173 MOTIVATE EMPLOYEE PERFORMANCE THROUGH GOAL SETTING
generated reasons for their low job attendance. The third session focused on the value of
setting behavioral and outcome (days present) goals for attendance. In the fourth session,
the importance of self - monitoring one ’s behavior was discussed. Specifi cally, the trainees
were taught to use charts and diaries to record (a) their own attendance, (b) the reasons for
missing one or more days of the week, and (c) the steps that were followed to subsequently
return to work. The trainees identified rewards and punishers in the fifth session that they
would self - administer contingent upon their attendance. In the sixth session the trainees
wrote a behavioral contract with themselves. The contract specified writing the goal(s) to
be attained, the timeframe for attaining the goal(s), the outcomes of attaining or failing
to attain the goal(s), and the task strategies necessary for attaining the goal(s). The seventh
session emphasized maintenance. That is, discussion focused on issues that might result in
a relapse in absenteeism, planning for such situations should they occur, and developing
strategies for dealing with such situations. During the final week of training, the trainer
reviewed each technique presented in the program, answered questions from the trainees
regarding these skills, and clarifi ed expectations for self - management.
Observe that the training took explicit account of goal setting moderators and sub-
principles discussed earlier in this chapter. Goal commitment was the focus of Sessions 5
and 6, where rewards and punishers were selected, and a behavioral contract was written.
Feedback through self - monitoring was emphasized in Session 4. The complexity of the task
and the situational constraints were the focus of Session 2 where employees specified in writ-
ing the behavior that they believed would enable them to get to work, and Session 7 where
they outlined possibilities for a relapse and what could be done to overcome such issues.
Participatory group discussions occurred throughout the eight weeks of training. The
main benefit of participation, as noted earlier, is cognitive; thus the training focused the
attention of each person in the group on identifying effective strategies for overcoming
obstacles to attaining the goal. In this way, self - efficacy was increased. Self - effi cacy cor-
related significantly in the study with subsequent job attendance. Three months later
employee attendance was signifi cantly higher in the training than in the control group.
The University of Washington conducted a six - month and a nine - month follow - up
study to determine the long - term effects of this training. Employees who had been trained
in self - management continued to have higher job attendance than those in the control
group. Moreover, when the people in the control group were subsequently given the same
training in self - management, but by a different trainer, they too showed the same positive
improvement in their self - efficacy with regard to coping with obstacles perceived by them
as preventing them from coming to work. Moreover, their job attendance increased to the
same level as that which the original training group had achieved three months after it
had been trained (Latham and Frayne, 1989 ).
When are goals ineffective? The answer to this question is given throughout this chap-
ter. For example, both the American Pulpwood Association and Weyerhaeuser found that
when the goal is abstract such as urging loggers to do their best, productivity is lower than
setting a specifi c difficult goal (Latham and Kinne, 1974; Latham and Yukl, 1975 ). They
also found that when goals are set and supervisory supportiveness is lacking, turnover is
high, people quit (Ronan, Latham, and Kinne, 1973 ). When specifi c challenging perform-
ance goals were set before people have acquired knowledge and skill to perform the task,
the performance of Air Force cadets dropped (Kanfer and Ackerman, 1989 ). In short,
goals do not work when the principles we have discussed are not applied.
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174 G ARY P. LATHAM
FUTURE DIRECTIONS
A limitation of theories of consciously set goals is that they fail to take advantage of the
subconscious, a storehouse of knowledge, and values beyond that which is found in aware-
ness at any given point in time. This is a limitation because unlike the conscious mind, the
subconscious has an enormous storage capacity. This storage capacity frees the conscious
mind to focus on new facts and make new integrations. Priming may be a method for set-
ting subconscious goals.
People were primed to diet through exposure to a room filled with exercise and dieting
magazines. People in the control group entered a room filled with magazines about poli-
tics and economics. Participants in the primed condition subsequently chose an apple over
a candy bar. They had no awareness of why they made that decision (Fishbach, Friedman,
and Kruglanski, 2003 ). Employees in a call center were given written instructions over a
backdrop photograph of a woman winning a race. They subsequently raised signifi cantly
more dollars than did employees whose instructions were written on an otherwise blank
sheet of paper (Shantz and Latham, 2009 ).
CONCLUSION
Specific challenging goals are motivational regardless of whether they are self - set,
set participatively, or assigned. If the person has the knowledge and skill necessary
to perform the task, performance goals should be set. If the requisite knowledge
or skill is lacking, learning goals should be set. If the moderators and subprinciples
described in this chapter are taken into account by practitioners of goal setting, the
probability that performance and satisfaction will increase is above .90 (Locke and
Latham, 1990 ). No other theory of motivation has been found to be as consistently
effective in the workplace as goal setting.
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178 G ARY P. LATHAM
EXERCISES
Group exercise – goal setting
Randomly divide people into three groups. Tell one group (in writing in all cases), so no
person will know the others ’ goals, to think of 14 ways to improve their business (UG
or MBA) program or their business unit ’s effectiveness in two minutes. (Give all subjects
actually three minutes to show the effects of persistence of the hard goal: the hard goal
group will still be working.) Give a second group the goal of 4 and tell the third group to
do their best. Calculate the mean score of each group at the end. (It is best to use lined
sheets numbered 1 to 14 or 1 to 4) for the goal groups and a blank sheet for the do best
group. (This helps prevent people from setting their own personal goals.)
Group exercise – subconscious priming
Give one group a photo of a woman winning a race and give the other group a blank sheet
of paper. Ask both groups to come up with as many uses for a coat hanger as they can in
two minutes. Count the scores of the two groups. This exercise is designed to measure the
effects of subconscious priming.
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10
Cultivate Self - effi cacy for Personal
and Organizational Effectiveness
ALBERT BANDURA
Human behavior is extensively motivated and regulated through the exercise of self -
influence. Among the mechanisms of self - influence, none is more focal or pervading
than belief in one ’s personal efficacy. Unless people believe that they can produce desired
effects and forestall undesired ones by their actions, they have little incentive to act or to
persevere in the face of difficulties. Whatever other factors may serve as guides and moti-
vators, they are rooted in the core belief that one has the power to produce desired results.
That belief in one ’s capabilities is a vital personal resource and is amply documented by
meta - analyses of findings from diverse spheres of functioning (Holden, 1991 ; Holden,
Moncher, Schinke, and Barker, 1990 ; Multon, Brown, and Lent, 1991 ; Stajkovic, Lee,
and Nyberg, in press, Stajkovic and Luthans, 1998 ). Perceived self - efficacy is founded on
the agentic perspective of social cognitive theory (Bandura, 1997 , 2006 , 2008 ). To be an
agent is to influence intentionally one ’s functioning and life conditions. In this view, people
are contributors to their life circumstances not just products of them.
CORE FUNCTIONAL PROPERTIES OF PERCEIVED SELF-EFFICACY
Converging evidence from controlled experimental and field studies verifies that belief
in one ’s capabilities contribute uniquely to motivation and action (Bandura, 1997 , 2009 ;
Bandura and Locke, 2003 ). Perceived self - efficacy occupies a pivotal role in causal struc-
tures because it affects human functioning not only directly, but through its impact on other
important classes of determinants. These determinants include goal aspirations, incen-
tives and disincentives rooted in outcome expectations, and perceived impediments and
opportunity structures in social systems. Figure 10.1 presents the structure of the causal
model. Diverse lines of research have verified the various paths in the structural model.
Longitudinal research, evaluating the full set of determinants, confirms that the social cog-
nitive model provides a good fit to the empirical evidence (Plotnikoff, Lippke, Courneya,
c10.indd 180 6/17/09 6:49:44 PM
180 A LBERT B ANDURA
Outcome
Expectations
Physical
Social
Self-evaluative
Self-efficacy Goals Behavior
Sociostructural
Factors
Facilitators
Impediments
FIGURE 10.1 Structural paths of influence wherein perceived self - efficacy affects motivation and
performance attainments both directly and through its impact on goals, outcome expectations,
and perception of sociostructural facilitators and impediments
Birkett, and Sigal, 2008 ). Among the different determinants, self - efficacy emerges as the
strongest predictor.
Efficacy beliefs affect self - motivation and action through their impact on goals and
aspirations. It is partly on the basis of efficacy beliefs that people choose what goal chal-
lenges to undertake, how much effort to invest in the endeavor, and how long to persevere
in the face of difficulties (Bandura, 1997 ; Locke and Latham, 1990 ). When faced with
obstacles, setbacks and failures, those who doubt their capabilities slacken their efforts,
give up prematurely, or settle for poorer solutions. Those who have a strong belief in their
capabilities redouble their effort to master the challenges.
Perceived efficacy likewise plays an influential role in the incentive and disincentive
potential of outcome expectations. The outcomes people anticipate depend largely on
their beliefs of how well they can perform in given situations. Those of high effi cacy
expect to gain favorable outcomes through good performance, whereas those who expect
poor performances of themselves conjure up negative outcomes. Anticipated outcomes
may take the form of material costs and benefits, social commendation and reproof, and
self - approving and self - censuring affective reactions.
In theories of motivation founded on the incentives operating through cognized outcomes,
such as expectancy - value theories, motivation is governed by the expectation that a given
behavior will produce certain outcomes and the value placed on those outcomes. This
type of theory includes only one of the two belief systems governing motivation. People act
on their beliefs about what they can do, as well as on their beliefs about the likely out-
comes of performance. There are countless activities which, if done well, produce valued
outcomes, but they are not pursued by those who doubt they can do what it takes to succeed.
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CULTIVATE SELF - EFFICACY FOR PERSONAL AND ORGANIZATIONAL EFFECTIVENESS 181
They exclude entire classes of options rapidly on self - efficacy grounds without bothering
to analyze their costs and benefi ts. Conversely, those of high effi cacy expect their efforts to
bring success and are not easily dissuaded by negative outcomes.
Rational models of motivation and decision making that exclude perceived self - effi cacy
sacrifice explanatory and predictive power. Perceived self - efficacy not only sets the slate of
options for consideration, but also regulates their implementation. Having decided on a course
of action, one cannot sit back and wait for the performances to appear. Making a decision
does not ensure that individuals will mobilize the effort to execute the decided course of action
successfully and stick to it in the face of difficulties. A psychology of decision making requires
a psychology of action grounded in enabling and sustaining efficacy beliefs. One must add a
performatory self to the decisional self, otherwise the decider is left stranded in thought.
Beliefs of personal efficacy shape whether people attend to the opportunities or to
the impediments that their life circumstances present and how formidable the obstacles
appear. People of high efficacy focus on the opportunities worth pursuing and view diffi cult
obstacles as surmountable. (Krueger and Dickson, 1993 , 1994 ). Through ingenuity and
perseverance they figure out ways of exercising some measure of control even in environ-
ments of limited opportunities and many constraints. Those beset with self - doubts dwell
on impediments which they view as obstacles over which they can exert little control.
They easily convince themselves of the futility of effort so they achieve limited success even
in environments that provide many opportunities.
DIVERSE ORGANIZATIONAL IMPACT OF PERCEIVED SELF-EFFICACY
The scope of the organizational applications of perceived self - effi cacy will be summarized
briefl y before presenting the principles for altering effi cacy belief systems. The brief review
of its scope addresses the challenge of constructing a parsimonious theory of broad gen-
eralizability. To begin with, perceived self - efficacy is an influential determinant of career
choice and development. The higher the people ’ s perceived efficacy to fulfi ll educational
requirements and occupational roles the wider the career options they seriously consider
pursuing, the greater the interest they have in them, the better they prepare themselves
educationally for different occupational careers, and the greater their staying power in
challenging career pursuits (Lent, Brown, and Hackett, 1994 ).
New employees receive training designed to prepare them for the occupational roles
they will be performing (see Chapter 4 , this volume). Those of low perceived effi cacy
prefer prescriptive training that tells them how to perform the roles as traditionally structured
( Jones, 1986 ; Saks, 1995 ). Employees of high perceived efficacy prefer training that enables
them to restructure their roles innovatively by improving the customary practices and adding
new elements and functions to them. Self - efficacious employees take greater initiative in
their occupational self - development and generate ideas that help to improve work processes
(Speier and Frese, 1997 ).
Organizations that provide their new employees with guided mastery experiences,
effective co - workers as models, and enabling performance feedback enhance employees ’
self - efficacy, emotional well - being, job satisfaction, and level of productivity (Saks, 1994 ,
1995 ). Other organizational practices, such as job enrichment and mutually supportive
communication, also build employees ’ perceived efficacy to take on broader functions and
a proactive work role (Parker, 1998 ). Self - efficacy theory provides a conceptual framework
c10.indd 182 6/17/09 6:49:45 PM
182 A LBERT B ANDURA
within which to study the determinants of effective work design and the mechanisms
through which they enhance organizational functioning.
Worklife is increasingly structured on a team - based model in which management
and operational functions are assigned to the workers themselves (see Chapter 11 ).
A self - management work structure changes the model of supervisory managership from
hierarchical control to facilitative guidance that provides the necessary resources, instruc-
tive guidance, and the support that teams need to do their work effectively (Stewart and
Manz, 1995 ). Enabling organizational structures builds managers ’ efficacy to operate as
facilitators of productive team work (Laschruger and Shamian, 1994 ). The perceived col-
lective efficacy of self - managed teams predicts the members ’ satisfaction and productivity
(Lindsley, Mathieu, Heffner, and Brass, 1994 , Little and Madigan, 1994 ).
Managers as enabling facilitators of team functioning (see Chapter 15 ) have also been
studied in terms of empowering leadership. It is typically characterized as leading by
example, participant decision making, enabling guidance, and receptivity to members ’
ideas (Arnold, Arad, Rhoades, and Drasgow, 2000 ). Empowering leadership has been
found to be positively related to team performance, but the mechanisms through which
it works have received little attention. Srivastava, Bartol, and Locke ( 2006 ) report that
empowering leaderships is not directly linked to performance but operates through knowl-
edge sharing and perceived team effi cacy.
The development of new business ventures and the renewal of established ones depend
heavily on innovativeness and entrepreneurship (see Chapter 30 ). With many resourceful
competitors around, viability requires continual ingenuity. At the preparatory level, self -
efficacy plays an influential role in the development of entrepreneurial intentions (Zhao,
Seibert, and Hills, 2005 ). Learning experiences and risk propensity had no direct effect on
intentions to pursue an entrepreneurial career. They had an impact only to the extent that
they raised individuals ’ beliefs in their efficacy to identify new business opportunities, cre-
ate new products, think creatively, and commercialize ideas. This is the structural pattern
of relations after controlling for prior entrepreneurial intentions. Self - efficacy continues to
play an infl uential role in the undertaking of new ventures.
Entrepreneurs have to be willing to take risks under uncertainty. Those of high effi -
cacy focus on the opportunities worth pursuing, whereas the less self - efficacious dwell on
the risks to be avoided (Kreuger and Dickson, 1993 , 1994 ). Hence, perceived self - effi cacy
predicts entrepreneurship and which patent inventors are likely to start new business
ventures (Chen, Greene, and Crick, 1998 ; Markman and Baron, 1999 ). Venturers who
achieve high growth in companies they have founded or transformed, or those they have
bought, have a vision of what they wish to achieve, a firm belief in their efficacy to realize
it, set challenging growth goals, and come up with innovative production and marketing
strategies (Baum, Locke, and Smith, 2001 ; Baum and Locke, 2004 ).
Effective leadership and workforces require receptivity to innovators that can improve
the quality and productivity of organizations. Managers ’ perceived technical effi cacy
influences their readiness to adopt electronic technologies ( Jorde - Bloom and Ford, 1988 ).
Efficacy beliefs affect not only managers ’ receptivity to technological innovations, but also
the readiness with which employees adopt them (Hill, Smith, and Mann, 1987 ; McDonald
and Siegall, 1992 ). Efficacy - fostered adoption of new technologies, in turn, alters the
organizational network structure and confers infl uence on early adopters within an organ-
ization over time (Burkardt, and Brass, 1990 ).
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CULTIVATE SELF - EFFICACY FOR PERSONAL AND ORGANIZATIONAL EFFECTIVENESS 183
Perceived self - effi cacy to fulfi ll occupational demands affects level of stress and physical
health of employees (see Chapter 27 ). Those of low efficacy are stressed both emotionally
and physiologically by perceived overload, in which task demands exceed their perceived
coping capabilities; whereas those who hold a high belief in their efficacy and that of
their group are unfazed by heavy workloads (Jex and Bliese, 1999 ). Perceived self - effi cacy
must be added to the demands – control model of occupational stress to improve its pre-
dictability. It contends that being given control over work activities reduces the stressful-
ness of worklife. High job demands with an opportunity to exercise control over various
facets of the work environment is unperturbing to jobholders of high perceived effi cacy,
but stressful to those of low perceived efficacy to manage them (Schaubroeck and Merritt,
1997 ). Efforts to reduce occupational stressfulness by increasing job control without rais-
ing self - efficacy to manage the increased responsibilities will do more harm than good. For
the self - effi cacious, job underload can be a stressor. Indeed, employees of high effi cacy are
stressed by perceived underload in which they feel thwarted and frustrated by organiz-
ational constraints in developing and using their potentialities (Matsui and Onglatco, 1992 ).
Exposure to chronic occupational stressors with a low sense of efficacy to manage job
demands and to enlist social support in times of difficulty, increases vulnerability to burn-
out (Brouwers and Tomic 1999 , 2006 ; Leiter, 1992 , Salanova, Grau, Cifre, and Llorens,
2000 ). This syndrome is characterized by physical and emotional exhaustion, depersonal-
ization of clients, lack of any sense of personal accomplishment, and occupational disen-
gagement with cynicism about one ’ s work.
A resilient sense of effi cacy provides the necessary staying power in the tortuous pursuit of
innovation and excellence. Yet the very undaunted self - efficacy that breeds success in tough
ventures may perpetuate adherence to courses of action that hold little prospect of even-
tual success. Thus, for example, managers of high perceived efficacy are more prone than
those of low efficacy to escalate commitment to unproductive ventures (Whyte and Saks,
2007 ; Whyte, Saks, and Hook, 1997 ), and to remain wedded to previously successful prac-
tices despite altered realities that place them at competitive disadvantage (Audia, Locke, and
Smith, 2000 ). The corrective for the perils of success is not deflation of personal effi cacy.
Such a disenabling remedy would undermine aspiration, innovation, and human accomplish-
ments in endeavors presenting tough odds. Individuals who are highly assured in their cap-
abilities and the effectiveness of their strategies are disinclined to seek discordant information
that would suggest the need for corrective adjustments. The challenge is to preserve the con-
siderable functional value of resilient self - effi cacy, but to institute information monitoring and
social feedback systems that can help to identify practices that are beyond the point of utility.
Reliable risk analysis, when achievable, is essential in preventing irresponsible ventures that
created a global financial crisis. However, one must distinguish between escalative commit-
ment to a failing venture and engagement in deceptive and fraudulent corporate practices.
Research on the exercise of moral agency attests to the influential role played by selective
moral disengagement in corporate practices that spawn widespread harm (Bandura, 1999;
Bandura, Caprara, and Zsolnai, 2002 ; White, Bandura, and Bero, 2009 ). As a trader in the
midst of the growing financial crisis put it, “ I leave my ethics at the door. ”
It is easy to achieve veridical judgment. Simply punish optimism. The motivational
belief system that fosters accomplishments in difficult endeavors combines realism
about tough odds, but optimism that through self - development and perseverant effort
one can beat those odds. We study intensively the risks of overconfi dence, but ignore the
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184 A LBERT B ANDURA
more pervasive personal and social costs of underconfidence. This bias probably stems
from the fact that the costs of lost opportunities and underdeveloped potentialities are
long delayed and less noticeable than those of venturesome missteps. The heavy selective
focus on the risk of overconfidence stands in stark contrast to the entrepreneurial spirit
driving the modern workplace in the rapidly changing world.
The functional value of veridical self - appraisal depends on the nature of the venture.
In activities where the margins of error are narrow and missteps can produce costly or
injurious consequences, one is best served by conservative appraisal of one ’s efficacy. It is a
different matter when difficult accomplishments can produce substantial personal or social
benefits and the personal costs involve time, effort, and expendable resources. People have
to decide whether to invest their efforts and resources in ventures that are difficult to fulfi ll, and
how much hardship they are willing to endure in formidable pursuits that may have huge
payoffs but are strewn with obstacles and uncertainties. Turning visions into realities is
an arduous process with uncertain outcomes. Societies enjoy the considerable benefi ts of
the eventual accomplishments in the arts, sciences, and technologies of its persisters and
risk takers. Realists trade on the merchandizable products that flow from the creations of
innovative persisters. To paraphrase the discerning observation of George Bernard Shaw,
reasonable people adapt to the world, unreasonable people try to change it, so human
progress depends on the unreasonable ones.
Social cognitive theory distinguishes among three forms of perceived effi cacy depend-
ing on the source of control over events. Direct individual efficacy pertains to belief in one ’ s
capability to exercise some measure of control over events within one ’s command. However,
in many spheres of functioning, people do not have direct control over conditions that affect
their lives. They exercise proxy efficacy through socially mediated influence. They do so by
influencing others who have the resources, knowledge, and means to act on their behalf
to secure the outcomes they desire. Many of the things people seek are achievable only
by working collaboratively for common purpose through interdependent effort. In the
exercise of collective efficacy, they pool their knowledge, skills, and resources, and act in con-
cert to shape their future (Bandura, 2000 ; Gully, Incalcaterra, Joshi, and Beaubien, 2002 ,
Stajkovic, Lee, and Nyberg, in press ).
Given the generality and centrality of the self - efficacy mechanism in the causal structures
governing diverse aspects of organizational functioning, programs aimed at developing a
resilient sense of efficacy can yield significant dividends in performance accomplishments
and personal well - being. The principles for developing and strengthening beliefs of personal
efficacy are addressed in the sections that follow. Social cognitive theory lends itself readily
to personal and social applications in diverse spheres of life. These applications are extensively
reviewed elsewhere (Bandura, 1986 , 1997 , 2004 , 2006 ). The present chapter summarizes
the relevant principles for developing a resilient sense of efficacy and illustrates their appli-
cation in the organizational fi eld.
PRINCIPLES GOVERNING THE DEVELOPMENT OF
P
ERSONAL AND COLLECTIVE EFFICACY
Self - efficacy beliefs are developed by four principal sources of information conveyed
enactively, vicariously, persuasively, and somatically. The most effective way of instilling
strong effi cacy is through enactive mastery experiences structured through graduated attainments.
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CULTIVATE SELF - EFFICACY FOR PERSONAL AND ORGANIZATIONAL EFFECTIVENESS 185
If people experience only easy successes they come to expect quick results and are
easily discouraged by failure. Hence, resilient efficacy requires experience in overcom-
ing obstacles through perseverant effort. The route to high attainments is strewn with
failure and setbacks. Success is achieved by learning from mistakes. Resilience must
also be built by training in how to manage failure so that it is informative rather than
demoralizing.
The second way of developing personal and collective efficacy is by social modeling.
Competent models convey knowledge, skills, and strategies for managing task demands.
By their example in pursuing challenges, models foster aspirations and interest in activities.
Seeing people similar to oneself succeed by perseverant effort raises observers ’ beliefs in
their own abilities.
Social persuasion is the third mode of influence. If people are persuaded to believe in
themselves they will exert more effort. This increases their chances of success. However,
credible persuaders must be knowledgeable and practice what they preach. Effective
efficacy builders do more than convey faith in others. They arrange situations for others
in ways that bring success. They avoid placing them, prematurely, in situations where they
are likely to fail. They measure success by self - improvement, rather than by triumphs over
others. Pep talks, without enabling guidance, achieve little.
People rely partly on their physical and emotional states in judging their effi cacy.
They read their tension, anxiety, and weariness as signs of personal defi ciencies. Mood
also affects how people judge their efficacy. Positive mood enhances a sense of effi cacy;
depressed mood diminishes it. People often misread their fatigue, windedness, aches,
and pains as evidence of declining physical efficacy. These physical conditions are often
due to a sedentary lifestyle. Efficacy beliefs are strengthened by reducing anxiety and
depression, building physical strength and stamina, and changing misrepresentations of
bodily states.
As illustrated in the diverse organizational effects cited earlier, efficacy beliefs regulate
human functioning through their impact on cognitive, motivational, affective, and decisional
processes. They affect: whether people think productively, pessimistically, or optimistically
and in self - enacting or self - debilitating ways; how well they motivate themselves and persevere
in the face of difficulties; the quality of their emotional well - being they achieve and their
vulnerability to stress and depression; and the life choices they make, which set the course
of their life paths.
Information for judging personal efficacy, whether conveyed enactively, vicariously,
persuasively, or somatically is not inherently informative. It is only raw data. Experiences
become instructive through cognitive processing of efficacy information and refl ective
thought. One must distinguish between information conveyed by events and information
as selected, interpreted, and integrated into self - effi cacy judgments.
The cognitive processing of efficacy information involves two separate functions (Bandura,
1997 ). The fi rst is the types of information people attend to and use as indicators of personal
efficacy. Social cognitive theory specifies the set of efficacy indictors that are unique to each
of the four major modes of influence. These are summarized in Table 10.1 . For example,
judgments of self - efficacy based on performance attainments will vary depending on people ’s
interpretive biases, the perceived difficulty of the task, how hard they worked at it, how much
help they received, the conditions under which they performed, their emotional and physical
state at the time, their rate of improvement over time, and biases in how they monitor and
recall their attainments.
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186 A LBERT B ANDURA
Table 10.1 The distinctive sets of factors within each of four modes of effi cacy infl uence
what can affect the construction of self effi cacy beliefs
Enactive Efficacy Information
Interpretive biases
Perceived task diffi culty and diagnosticity
Effort expenditure
Amount of external aid received
Situational circumstances of performance
Transient affective and physical states
Temporal pattern of successes and failures
Selective bias in self-monitoring of
performance
Selective bias in memory for performance
attainments
Persuasory Efficacy Information
Credibility
Expertness
Consensus
Degree of appraisal disparity
Familiarity with task demands
Vicarious Efficacy Information
Model attribute similarity
Model performance similarity
Model historical similarity
Multiplicity and diversity of modeling
Mastery or coping modeling
Exemplifi cation of strategies
Portrayal of task demands
Somatic And Affective Information
Degree of attentional focus on
somatic states
Interpretive biases regarding somatic
states
Perceived source of affective arousal
Level of arousal
Situational circumstances of arousal
The indicators people single out provide the information base on which the self - appraisal
process operates. The second function in efficacy judgment involves the combination rules
or heuristics people use to weight and integrate efficacy information from the diverse sources
in forming their efficacy beliefs. The informativeness of the various efficacy indicants will
vary for different spheres of functioning. The various sources of efficacy information may
be integrated additively, multiplicatively, configurally, or heuristically. This judgmental pro cess
is not entirely dispassionate. Strong preconceptions and affective proclivities can alter self -
efficacy appraisals positively or negatively.
The multiple benefits of a strong sense of personal efficacy do not arise simply from the
incantation of capability. Saying something should not be confused with believing it to be
so. A sense of personal efficacy is constructed through a complex process of self - persuasion
based on integrating constellations of efficacy information conveyed enactively, vicariously,
socially, and physiologically.
Enablement through guided mastery
Guided mastery provides one of the most effective ways of cultivating competencies.
However, a skill is only as good as its execution, which is heavily governed by self - regulatory
and motivational factors. Individuals may, therefore, perform poorly, adequately, or well
with the same set of skills depending on the beliefs they hold about their capabilities in
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CULTIVATE SELF - EFFICACY FOR PERSONAL AND ORGANIZATIONAL EFFECTIVENESS 187
given situations (Bandura, 1997 ). Part of the power of guided mastery stems from its use
of all four modes of effi cacy development.
The method that produces the best gains in both self - efficacy and skill combines three
components (Bandura, 1986 ). First, the appropriate skills are modeled to convey the basic
rules and strategies. Second, the learners receive guided practice under simulated conditions
to develop proficiency in the skills. Third, they are provided with a graduated transfer
program that helps them to apply their newly learned skills in work situations in ways that
will bring them success.
Enabling modeling. Modeling is the first step in developing competencies. Complex skills
are broken down into subskills, which can be modeled on videotape in easily mastered
steps. Subdividing complex skills into subskills produces better learning than trying
to teach everything at once. After the subskills are learned by this means, they can be
combined into complex strategies to serve different purposes. Effective modeling teaches
general rules and strategies for dealing with different situations rather than only specifi c
responses or scripted routines. Voiceover narration of the rules and strategies as they
are being modeled, and brief summaries of the rules, enhance development of generic
competencies.
The execution of skills must be varied to suit changing circumstances. People who
learn rules in the abstract usually do a poor job in applying them in particular situations.
However, teaching abstract rules with varied brief examples promotes generalizability of
the skills being taught by showing how the rules and strategies can be widely applied and
adjusted to fit changing conditions. A single lengthy example teaches how to apply the
rule in that particular situation but provides no instruction on how to adapt its application
to varying situations.
People fail to apply what they have learned, or do so only half - heartedly, if they distrust
their ability to do it successfully. Therefore, modeling influences must be designed to build
a sense of personal effi cacy as well as to convey knowledge about rules and strategies. The
impact of modeling on beliefs about one ’s capabilities is greatly increased by perceived
similarity to the models. Learners adopt modeled ways more readily if they see individu-
als similar to themselves solve problems successfully with the modeled strategies than if
they regard the models as very different from themselves. The characteristics of models, the
type of problems with which they cope, and the situations in which they apply their skills
should be made to appear similar to the trainees ’ own circumstances.
Guided skill perfection. Factual and strategic knowledge alone will not beget profi cient per-
formance. Knowledge structures are transformed into proficient action through a con-
ception - matching process (Bandura, 1986 ). Enabling modeling provides the guiding
conception for proficient management of one ’s worklife. The feedback accompanying
enactments provides the information needed to detect and correct mismatches between
the generic conception of requisite skills and action. This comparative process is repeated
until a close match is achieved. Putting into practice what one has learned cognitively
can also reveal gaps and flaws in the guiding conception. Recognizing what one does not
know contributes to the refinement of cognitive representations by further modeling and
verbal instruction regarding the problematic aspects of the representation.
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188 A LBERT B ANDURA
In the transformational phase of competency development, learners test their
newly acquired skills in simulated situations where they need not fear making mistakes
or appearing inadequate. This is best achieved by role rehearsal in which they practice
handling the types of situations they have to manage in their work environment. Mastery
of skills can be facilitated by combining cognitive and behavioral rehearsal. In cognitive
rehearsal, people rehearse mentally how they will translate strategies into what they say
and do to manage given situations.
In perfecting their skills, people need informative feedback about how they are doing.
A common problem is that they do not fully observe their own behavior. Informative feed-
back enables them to make corrective adjustments to get their behavior to fit their idea of
how things should be done. Videotape replays are widely used for this purpose. However,
simply being shown replays of one ’s own behavior usually has mixed effects (Hung and
Rosenthal, 1981 ). To produce good results, the feedback must direct attention to the cor-
rective changes that need to be made. It should call attention to successes and improve-
ments and correct deficiencies in a supportive and enabling way so as to strengthen
perceived efficacy. Some of the gains accompanying informative feedback result from
raising people ’s beliefs in their efficacy rather than solely from further skill development.
The feedback that is most informative and achieves the greatest improvements takes the
form of corrective modeling. In this approach, the subskills that have not been adequately
learned are further modeled and learners rehearse them until they master them.
Effective functioning requires more than learning how to apply rules and strategies for
managing organizational demands. The transactions of occupational life are littered with
impediments, discordances, and stressors. Many of the problems of occupational functioning
reflect failures of self - management rather than deficiencies of knowledge and technical
skills. Therefore, an important aspect of competency development includes training in
resiliency to difficulties. As we shall see later, this requires skill in cognitive self - guidance,
self - motivation, and strategies for counteracting self - debilitating reactions to troublesome
situations that can easily unhinge one.
Gist, Bavetta, and Stevens ( 1990 ) augmented a guided model training in negotiation
skills with a self - management component. In the latter phase, trainees were taught how
to anticipate potential stressors, devise ways of overcoming them, monitor the adequacy
of their coping approach, and use self - incentives to sustain their efforts. Trainees who had
the benefit of the supplemental self - management training were better at applying learned
negotiation skills in new contractual situations presenting conflictful and intimidating
elements and negotiated more favorable outcomes than trainees who did not. The self -
managers made fl exible use of the wide range of strategies they had been taught, whereas
their counterparts were more likely to persevere with only a few of the strategies when they
encountered negative reactions.
Vinokur and his colleagues devised a multifaceted program to immunize laid - off workers
against the debilitating effects of job loss and to restore their efficacy to secure employment
in quality jobs (Vinokur, van Ryn, Gramlich, and Price, 1991 ). They were taught, via
modeling and rehearsed role enactments, how to carry out effective job searches. They
identified potential impediments and developed problem - solving strategies for generating
alternative solutions. They received resilience training by anticipating potential problems
and setbacks and developing coping strategies that enabled them to persist despite disap-
pointments during their job search. In follow - up assessments conducted shortly after the
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CULTIVATE SELF - EFFICACY FOR PERSONAL AND ORGANIZATIONAL EFFECTIVENESS 189
program and several years later, the project participants had higher job - seeking effi cacy,
found jobs more quickly, got better quality jobs, and earned higher wages than did those
who did not receive the program. In a meditational analysis, van Ryn and Vinokur ( 1992 )
found that the effect of the reemployment program on job search behavior was mediated
by perceived self - effi cacy.
Job searches in a competitive market require a lot of self - initiative and staying power
in face of discouraging rejections. A resilient sense of efficacy is needed to sustain the
effort. Yanar, Budworth, and Latham ( 2008 ) combined modeling, functional verbal self -
guidance, role rehearsal, and proximal goal setting to hasten reemployment of women
in an Islamic society. They face the added obstacle of gender discrimination in the work-
place. Compared to women who received didactic instruction in job search, those who
had the benefit of the enabling sociocognitive program were more persistent in their job
search and more likely to find work in their area of interest. In accord with the fi ndings
of Vinokur et al. ( 1991 ), self - efficacy completely mediated the effect of the program on
job search behaviors. This low cost/high benefit approach also enabled aboriginal youth
to secure and maintain employment. The higher instilled self - efficacy the better their
employment outcomes (Latham and Budworth, 2006 ). This research addresses a matter
of growing import as societies continue to become more ethnically and culturally diverse.
Transfer training by self - directed success. Modeling and simulated enactments are well suited
for creating competencies. But new skills are unlikely to be used for long unless they prove
useful when they are put into practice in work situations. People must experience suffi cient
success using what they have learned to believe in themselves and the value of the new
ways. This is best achieved by a transfer program in which newly acquired skills are fi rst
tried on the job in situations likely to produce good results. Learners are assigned selected
problems they often encounter in their everyday situations. After they try their hand at
it, they discuss their successes and where they ran into difficulties for further instructive
training. As learners gain skill and confidence in handling easier situations, they gradu-
ally take on more difficult problems. If people have not had sufficient practice to convince
themselves of their new effectiveness, they apply the skills they have been taught weakly
and inconsistently. They rapidly abandon their skills when they fail to get quick results or
experience diffi culties.
Mastery modeling is now increasingly used, especially in videotaped formats, to develop
competencies. But its potential is not fully realized if training programs do not provide
sufficient practice to achieve proficiency in the modeled skills or if they lack an adequate
transfer program that provides success with the new skills in the natural environment. Such
programs rarely include training in resiliency through practice on how to handle setbacks
and failure. When instructive modeling is combined with guided role rehearsal and a guided
transfer program, this mode of organizational training usually produces excellent results.
Because trainees learn and perfect effective ways of managing task demands under lifelike
conditions, problems of transferring the new skills to everyday life are markedly reduced.
A mastery modeling program devised by Latham and Saari ( 1979 ) to teach supervi-
sors the interpersonal skills they need to work effectively through others is an excellent
illus tration of this type of approach to competency development. Supervisors have an
important impact on the morale and productivity of an organization. But they are often
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190 A LBERT B ANDURA
selected for their technical competencies and job - related knowledge, whereas their success
in the supervisory role depends largely on their interpersonal skills to guide, enable, and
motivate those they supervise.
Latham and Saari ( 1979 ) used videotape modeling of prototypic work situations to
teach supervisors how to manage the demands of their supervisory role. They were taught
how to increase motivation, give recognition, correct poor work habits, discuss potential
disciplinary problems, reduce absenteeism, handle employee complaints, and overcome
resistance to changes in work practices (Goldstein and Sorcher, 1974 ). Summary guide-
lines defining key steps in the rules and strategies being modeled were provided to aid
learning and memorability. The group of supervisors discussed and then practiced the
skills in role - playing scenarios using incidents they had to manage in their work. They
received enabling feedback to help them improve and perfect their skills.
To facilitate transfer of supervisory skills to their work environment, they were
instructed to use the skills they had learned on the job during the next week. They then
reviewed their successes and difficulties in applying the skills. If they encountered prob-
lems, the incidents were reenacted and the supervisors received further training through
instructive modeling and role rehearsal on how to manage such situations. Supervisors
who received the guided mastery training performed their supervisory role more skillfully
both in role - playing situations and on the job assessed a year later than did supervisors
who did not receive the training. Because the skills proved highly functional, the super-
visors adhered to them. Weak training programs often rely heavily on platitudinous rules
for success delivered in a hyped - up fashion. Any motivational effects rapidly dissipate as
the initial burst of enthusiasm fades through failure to produce good results. Latham and
Saari found that simply explaining to supervisors in the control group the rules and strat-
egies for how to handle problems on the job without modeling and guided role rehearsal
did not improve their supervisory skills. Because this approach provides supervisors with
the tools for solving the problems they face, they expressed favorable reactions to it.
Supervisory skills instilled by guided mastery improve the morale and productivity of
organizations (Porras and Anderson, 1981 ; Porras, Hargis, Patterson, Maxfi eld, Roberts,
and Bies, 1982 ). Compared to the productivity of control plants, the one that received the
guided mastery program improved supervisory problem - solving skills, had a signifi cantly
lower absentee rate, lower turnover of employees, and a 17% increase in the monthly
level of productivity over a six - month period. This surpassed the productivity of the control
plants. Mastery modeling produces multiple benefi ts in sales similar to those in production
as reflected in enhanced productivity and a lower rate of turnover in personnel (Meyer
and Raich, 1983 ).
There are no training shortcuts or quick fixes for perceived ineffi cacy, dysfunctional
work habits, and deficient self - regulation and occupational competencies. As is true in other
spheres of functioning (Miller, Brown, Simpson, Handmaker, Bien, Luckie, Montgomery,
Hester, and Tonigan, 1995 ), the methods that are least effective are most widely used because
they are easy to do, whereas enablement methods of proven value are used less often
because they require greater investment of time and effort.
The application of guided mastery for markedly different purposes, such as the elimin-
ation of anxiety dysfunctions, further illustrates the power and generality of this approach
(Bandura, 1997 ; Williams, 1992 ). Talk alone will not cure intractable problems. To overcome
chronic anxiety people have to confront the perceived threats and gain mastery over them.
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CULTIVATE SELF - EFFICACY FOR PERSONAL AND ORGANIZATIONAL EFFECTIVENESS 191
When people avoid what they fear, they lose touch with the reality they shun. Guided mas-
tery provides a quick and effective way of restoring reality testing and disconfi rming faulty
beliefs. But even more important, mastery experiences that are structured to develop cop-
ing skills provide persuasive affirming tests that they can exercise control over what they
fear. However, individuals are not about to do what they avoid. Therefore, one must cre-
ate enabling environmental conditions so that individuals who are beset with profound
self - doubt about their coping capabilities can perform successfully despite themselves.
This is achieved by enlisting a variety of performance mastery aids (Bandura, 2004 ). This
mode of treatment eliminates anxiety, biological stress reactions, and phobic behavior.
It also transforms dream activity and wipes out recurrent nightmares of long standing.
The changes endure.
Cognitive mastery modeling. A great deal of professional work involves making decisions and
finding solutions to problems by drawing on one ’s knowledge, constructing new knowl-
edge structures, and applying decision rules. Competency in problem solving requires the
development of thinking skills for how to seek and construct reliable information and put
it to good use. People can learn thinking skills and how to apply them by observing the
decision rules and reasoning strategies models use as they seek solutions.
Over the years, organizational training relied almost exclusively on the traditional lec-
ture format despite its limited effectiveness (but see Chapter 4 ). Mastery modeling works
much better than lectures (Burke and Day, 1986 ). With the advent of the computer, talk-
ing heads are being replaced by self - paced instructional programs that provide step -
by-step instruction, structured drills, and feedback of accuracy. Comparative tests indicate
that cognitive modeling may provide a better approach to the development of higher-
order cognitive competencies. In teaching reasoning skills through cognitive modeling,
performers verbalize their strategies aloud as they engage in problem - solving activities
(Meichenbaum, 1984 ). The thoughts guiding their decisions and actions are thus made
observable. During cognitive modeling, the models verbalize their thoughts as they ana-
lyze the problem, seek information relevant to it, generate alternative solutions, judge the
likely outcomes associated with each alternative, and select the best way of implementing
the chosen solution. They also verbalize their strategies for handling difficulties, how to
manage intrusive thoughts and disruptive emotional reactions, recover from mistakes, and
motivate themselves. This enables them to remain task oriented under trying conditions.
Modeling thinking skills along with action strategies can aid development of reasoning
skills in several ways. Watching models verbalize their thoughts as they solve problems
commands attention. Hearing the rules verbalized as the action strategies are implemented
produces faster learning than only being told the rules or seeing only the actions modeled.
Modeling also provides an informative context in which to demonstrate how to go about
solving problems. The rules and strategies of reasoning can be repeated in different forms
as often as needed to develop generative thinking skills. Varied application of reasoning
strategies to fit different circumstances increases their understanding and generalizability.
Observing models verbalize how they use their cognitive skills to solve problems highlights
the capacity to exercise control over one ’s thought processes, which has been shown to boost
observers ’ sense of efficacy over and above the strategic information conveyed. Similarity
to succeeding models boosts the instructional impact. And finally, modeling how to manage
failures and setbacks fosters resilience to aversive experiences.
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192 A LBERT B ANDURA
Gist ( 1989 ) taught managers how to generate ideas to improve the quality of organ-
izational functioning and customer service by providing them with guidelines and practice
in innovative problem solving. Cognitive modeling, in which models verbalized strategies
for generating ideas, proved superior to presenting the same guidelines solely in the tra-
ditional lecture format. Managers who had the benefit of cognitive modeling expressed
a higher sense of efficacy and generated considerably more ideas and ideas of greater
variety. Regardless of format of instruction, the higher the instilled efficacy beliefs, the
more abundant and varied were the generated ideas.
The advantages of cognitive mastery modeling are even more evident when the effective-
ness of alternative instructional methods is examined as a function of trainees ’ preexisting
level of perceived efficacy. Gist, Rosen, and Schwoerer ( 1988 ) taught managers with a
computerized tutorial how to operate a spreadsheet program and use it to solve business
problems. Cognitive modeling provided the same information and the same opportunities
to practice the computer skills but used a videotape of a model demonstrating how to
perform the activity. Videotaped cognitive modeling instilled a uniformly high sense of
efficacy to acquire computer software skills regardless of whether managers began the
training self - assured or self - doubting of their computer capabilities. A computerized
tutorial had weaker effects on efficacy beliefs and was especially ineffective with managers
who were insecure in their computer efficacy. Cognitive modeling also promoted a high
level of computer skill development. The higher the preexisting and the instilled effi cacy
beliefs, the better the skill development. The benefits of mastery modeling extend beyond
development of technical skills. Compared to the computer tutorial training, mastery
modeling produced a more effective working style, less negative affect during training, and
higher satisfaction with the training program. Mastery modeling provides an instructional
vehicle that lends itself well for enlisting affective and motivational determinants of
competency development.
We have entered a new era in which the construction and management of knowledge
and development of expertise relies increasingly on electronic inquiry. Much information
is currently available only in electronic rather than print form. The electronic network
technologies greatly expand opportunities to attain expertise. Skill in electronic search is
emerging as an essential competency. Knowledge construction through electronic inquiry
is not simply a mechanical application of a set of cognitive operators to an existing
knowledge base. Rather, it is a challenging process in which affective, motivational, and
self - regulatory factors influence how information is gathered, evaluated, and integrated into
knowledge structures.
Information seekers face an avalanche of information in diverse sources of varying
value and reliability. It requires a robust sense of efficacy to find one ’ s way around this
mounting volume and complexity of information. People who doubt their effi cacy to
conduct productive inquiries, and to manage the electronic technology, can quickly become
overwhelmed. In developing their cognitive skills for untangling the web, individuals
were taught how to frame the electronic inquiry by selecting key constructs and fi nding
reliable sources; how to broaden the scope and depth of inquiry by using appropriate
connectors; and how to sequence the inquiry optimally (Debouski, Wood, and Bandura,
2001 ). Compared to a group that received a computer tutorial, those who had benefi t of
cognitive modeling that conveyed the same search rules gained higher perceived effi cacy
and satisfaction in knowledge construction. They spent less time in errors and redundancies,
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CULTIVATE SELF - EFFICACY FOR PERSONAL AND ORGANIZATIONAL EFFECTIVENESS 193
used better search and sequencing strategies, learned more, and were more successful in
constructing new knowledge. Putting a human face with whom one can identify in electronic
instructional systems substantially boosts their power.
Belief in one ’s efficacy to manage electronic technology influences not only how
well individuals acquire knowledge by this means, but also their receptivity to elec-
tronic innovations, job satisfaction and productivity (Gist, Rosen, and Schwoerer, 1989 ;
McDonald and Siegall, 1992 ). Many organizational activities are now performed by
members of virtual teams working together from scattered locations through com puter
mediated collaboration. Working remotely with little direct supervision across time,
space, and cultural orientations can be quite taxing. Those of high perceived efficacy
for remotely conducted collaborative work have more positive job attitudes and achieve
higher job performances than those of low perceived efficacy (Staples, Hulland, and
Higgins, 1998 ).
CULTIVATION OF SELF-REGULATORY COMPETENCIES
The capacity for self - regulation through the exercise of self - influence is another core
feature of an agentic theory of human motivation and action (Bandura, 2006 ). The accel-
erated growth of knowledge and rapid pace of social and technological change are plac-
ing a premium on capabilities for self - motivation and self - development (Bandura, 2002 ).
Indeed, to keep up with a world that is rapidly changing, people have to develop, upgrade,
and reform their competencies in continual self - renewal. To achieve this, they must devel-
op skills in regulating the cognitive, motivational, affective, and social determinants of their
functioning.
Self - management is exercised through a variety of interlinked self - referent processes
including self - monitoring, self - efficacy appraisal, personal goal setting, and enlistment of
motivating incentives (Bandura, 1986 , 1991 ; Locke and Latham, 1990 ). Knowledge of how
these various subfunctions of self - regulation operate provides particularized guides on
how to develop and implement this capability.
People cannot influence their own motivation and actions if they do not keep track of
their performances. Neither goals without knowing how one is doing nor knowing how
one is doing without any goals is motivating (Bandura, 1991 ). Success in self - regulation
partly depends on the fidelity, consistency, and temporal proximity of self - monitoring.
Observing one ’s pattern of behavior is the first step toward doing something to affect it
but, in itself, such information provides little basis for self - directed reactions.
Goals and aspirations play a pivotal role in the exercise of self - directedness. Goals
motivate by enlisting self - evaluative investment in activities rather than directly. Once
people commit themselves to goal challenges they care about how they do. Two types
of affective motivators come into play – people seek self - satisfaction from fulfi lling valued
goals, and are prompted to intensify their efforts by discontent with substandard perform-
ances. The goals that are motivating are the type that activate self - investment in the activ-
ity. They include explicitness, level of challenge, and temporal proximity. Explicit goals
motivate because they specify the type and amount of effort needed to attain them. Many
of the goals people set for themselves result in failure because they are too general and
personally non - committing. To create productive involvement in activities, goals must be
c10.indd 194 6/17/09 6:49:47 PM
194 A LBERT B ANDURA
explicit (see Chapter 9 ). The amount of effort enlisted and satisfaction that accompany
different goal attainments depend on the level at which they are set. Strong interest and
self - investment in activities are sparked by challenges. There is no self - satisfaction with
easy successes. Nor do goals that are widely out of one ’s reach bring any satisfying accom-
plishments and, over time, they can weaken one ’s sense of effi cacy.
The effectiveness of goals in regulating motivation and performance depends on how
far into the future they are projected. Long range goals provide the vision and give direction
to one ’s activities. But they are too distant to serve as current motivators. There are too
many competing activities at hand for distant futures to exert much impact on current
behavior. It is too easy to put off serious efforts in the present to the tomorrows of each
day. Self - motivation is best sustained by attainable subgoal challenges that lead to distant
aspirations. Short - term subgoals enlist the strategies and motivators in the here and now
needed to get to where one is going. Difficult goal challenges are not achievable at once.
Seemingly overwhelming activities are mastered by breaking them into smaller manage-
able steps. Concentrated effort in the short term brings success in the long term (Bandura
and Schunk, 1981 , Latham and Brown, 2006 ; Morgan, 1985 ).
Goal systems structured along the lines described above function as remarkably robust
motivators across diverse activity domains, environmental settings, populations, and time
spans (Bandura, 1997 ; Locke and Latham, 1990 ). The chapter by Latham (Chapter 9 )
provides further guidelines on how to structure and implement goal systems for productive
engagement in personal and organizational pursuits.
Perceived self - efficacy plays an influential role in the self - regulation of motivation and
actions through goal systems. It does so in part by its impact on goal setting. The stronger
the people ’s belief in their capabilities the higher the goal challenges they set for them-
selves and the firmer their commitment to them. Graduated subgoals provide a means
for building perceived self - efficacy and intrinsic interest where they are lacking (Bandura,
1991 , 1997 ). There are several ways they achieve these effects (Bandura and Schunk,
1981 ). Sustained effort fostered by proximal goals builds competencies. Subgoal attain-
ments provide clear markers of increasing mastery. Evidence of progress builds self -
efficacy. Subgoal attainments also bring self - satisfaction. Satisfying experiences build
intrinsic interest in activities.
Effective self - regulation is also central to personal management of emotional states and
problem behaviors that have a negative spillover on work performance. Employee absen-
teeism costs US industries billions of dollars annually. It is a serious problem that disrupts
work schedules, raises costs, and decreases productivity. Frayne and Latham ( 1987 ) provide
the elements for an effective self - management system to reduce absenteeism. Employees
who often missed work were taught in groups how to manage their motivation and behav-
ior more effectively. They kept a record of their work attendance. They analyzed the
personal and social problems that prevented them from getting to work, and were taught
strategies for overcoming these obstacles. They set themselves short - term goals for work
attendance, and rewarded themselves for meeting their goals. Training in self - regulation
increased employees ’ beliefs in their efficacy to overcome the obstacles that led them to
miss work. They improved their work attendance and maintained these changes over
time (Latham and Frayne, 1989 ). The stronger they believed in their self - management
capabilities, the better was their work attendance. A control group of employees who did
not receive the program in self - regulation continued their absentee ways.
c10.indd 195 6/17/09 6:49:47 PM
CULTIVATE SELF - EFFICACY FOR PERSONAL AND ORGANIZATIONAL EFFECTIVENESS 195
CONCLUSION
The guiding principles and applications reviewed in the preceding sections under-
score the centrality of perceived self - efficacy as a personal resource that yields
dividends in motivation, performance attainments, and emotional well - being. Social
cognitive theory embeds perceived efficacy within a broad network of sociocognitive
factors. There are several features of sociocognitive theory that lend themselves
readily to widespread social applications. Its key sociocognitive factors are amenable
to change, the theory specifies how to alter them, clarifies the mechanisms through
which they work, and provides explicit guidelines on how to translate theory into
effective practice for personal and social change.
A substantial body of evidence verifies that perceived self - efficacy operates as a
common mechanism through which changes are achieved by diverse modes of infl uence,
across markedly diverse spheres of functioning, with heterogeneous populations, and
under differing life conditions. This widespread generalizability is in keeping with
Occam ’s maxim advocating theoretical parsimony.
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NOTE
Some sections of this chapter contain revised, updated, and expanded material from the
book Self - Efficacy: The Exercise of Control (1997) New York, Freeman.
EXERCISES
Personal self - efficacy building
Identify a skill of competency that you lack but would like to have. Based on the material in
this chapter, design a training program (others may be part of the program) which would
increase your self - efficacy in this realm. Include both behavioral and cognitive aspects.
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200 A LBERT B ANDURA
Building team efficacy
Based on your previous work experience in teams, identify a situation in which team effi -
cacy was low.
What competencies did the team lack which undermined their effectiveness? How would
you build the needed types of efficacy? What would you do to prevent overconfi dence?
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11
Using Empowerment to Motivate
People to Engage in Effective
Self - and Shared Leadership
JAY A. CONGER AND CRAIG L. PEARCE
In recent decades there has been a steady increase in interest in empowerment as a moti-
vational tool in both the academic (e.g. Conger and Kanungo, 1988 ; Houghton, Neck,
and Manz, 2003 ; Liden and Arad, 1995 ; Mills and Ungson, 2003 ; Pearce and Sims,
2002 ; Thomas and Velthouse, 1990 ) and practitioner literature (e.g. Block, 1987 ; Conger,
1989 ; Manz and Sims, 1989 , 2001 ; Pearce, 2008 ). The essence of empowerment, at the
individual level of analysis, entails granting autonomy to individuals to perform tasks,
while simultaneously enhancing their task - related self - efficacy (Bandura, 1986 , 1997 ; see
also Chapter 10 ). Naturally, empowerment needs to be founded on appropriately set goals
(Locke and Latham, 1990 ; see also Chapter 9 ).
At the individual level of analysis, empowerment is ultimately experienced when fol-
lowers engage in effective self - leadership (Manz and Sims, 1980 ; Houghton et al., 2003 ),
where self - leadership is defi ned as “ a process through which people infl uence themselves to
achieve the self - direction and self - motivation needed to perform ” (Houghton et al., 2003 ,
p. 126). The empirical evidence on empowerment suggests that it has a powerful positive
influence on individuals (e.g. Liden, Wayne, and Sparrowe, 2000 ; Spreitzer, 1995 ; Spreitzer,
Kizilos, and Nason, 1994 ).
As we move to the group level of analysis, empowerment is experienced when the group
effectively practices shared leadership (Pearce and Conger, 2003 ; Pearce, 2004 , 2008 ),
where shared leadership is defined as “ a dynamic, interactive influence process among
individuals in groups for which the objective is to lead one another to the achievement of
group or organizational goals or both ” (Pearce and Conger, 2003 , p. 1). Here again, the
empirical evidence is fairly robust regarding the positive influence of empowerment (e.g.
Ensley, Hmieleski, and Pearce, 2006 ; Pearce and Sims, 2002 ; Pearce, Yoo, and Alavi, 2004 ).
In the next section we explore the complex process of empowerment.
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202 JAY A. CONGER AND CRAIG L. PEARCE
THE EMPOWERMENT PROCESS
The actual process of empowerment can be viewed along six stages that include the psy-
chological state of an empowering experience, its antecedent conditions, and its behav ioral
consequences. The six stages are shown in Figure 11.1 . The first stage is the diagnosis of
conditions within individuals and their organizations that are responsible for feelings of
disempowerment. Following the diagnosis of disempowerment, managers may employ cer-
tain strategies indicated in stage 2. The employment of these strategies is aimed at not only
removing some of the conditions responsible for disempowerment; but also (and more impor-
tantly) at providing subordinates with empowerment information for stage 3. Individuals then
interpret this information in stage 4 according to personal styles of assessment. If these styles
assess the information as empowering, then an individual will feel empowered and the behav-
ioral effects of empowerment will be observed in stage 5, where individuals become effective
self - leaders (Manz and Sims, 1980 ). Beyond these five stages for the individual, empowerment
can spread among group members and lead to group empowerment, whose result is the dis-
play of shared leadership in stage 6 (Bligh, Pearce, and Kohles, 2006 ).
Stage 1
Starting with the first stage (the context), there are specific individual and contextual factors
that contribute to the lowering of empowerment feelings among organizational mem bers
(Block, 1987 ; Conger, 1989 ; Kanter, 1979 , 1983 ; Thomas and Velthouse, 1990 ). From the
standpoint of organizational factors, Table 11.1 identifies some of the principal factors that
influence and hinder empowerment outcomes. These are organized into four categories:
(a) organizational, (b) hierarchical leader behavior, (c) reward systems, and (d) job design.
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6
Conditions Using Enhancing Interpreting Leading to Resulting in
leading to a managerial self-efficacy information individual group level
psychological empowerment as either behavioral empowerment
state of strategies and empowering effects of
disempowerment techniques or not empowerment
Enactive
Development
Dispositional
Organizational
Initiation of
Supportive
attainment
of shared
effects on
self-leadership
culture
factors
organizational
interpretation
practices on the
leadership
Hierarchical
across the
Vicarious
of events –
part of
experience
organization
behavior
and
leader
Training
different
individuals
people will
Verbal
interpret
development
persuasion
events
Involvement
Reward system
differently
Emotional
Job design
in goal setting
arousal
Job enrichment
Selection
FIGURE 11.1 Stages of the empowerment process
Source: Adapted from Conger and Kanungo (1988)
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203 USING EMPOWERMENT TO MOTIVATE PEOPLE
Table 11.1 Context factors leading to potential lowering of empowerment beliefs
Organizational factors
• Signifi cant organizational changes/transitions
• Competitive pressures
• Impersonal bureaucratic climate
• Poor communications/network-forming systems
• Highly centralized organizational resources
Hierarchical leader behavior
• Directive (high control)
• Aversive (emphasis on fear)
• Negativism (emphasis on failure)
• Lack of reason for actions/consequences
Reward systems
• Non-contingency (arbitrary reward allocation)
• Low incentive value of rewards
• Lack of competence-based rewards
• Lack of innovation-based rewards
Job design
• Lack of role clarity
• Lack of training and technical support
• Unrealistic goals
• Lack of appropriate authority/discretion
• Low task variety
• Limited participation in programs, meetings, decisions that have a direct impact on job
performance
• Lack of appropriate/necessary resources
• Lack of network-forming opportunities
• Highly established work routines
• High rule structure
• Low advancement opportunities
• Lack of meaningful goals/tasks
• Limited contact with senior management
Source: Adapted from Conger and Kanungo (1988).
For instance, organizations with high levels of formalization and impersonal control sys-
tems can stifle member initiative (Chapter 22 ), meaningfulness, and a sense of responsi-
bility. Aversive and directive hierarchical leader behavior can strip control and discretion
from organizational members (Pearce, Sims, Cox, Ball, Schnell, Smith, and Trevino, 2003 ).
Rewards may not be allocated on the basis of members ’ competence or innovative behav-
ior, but rather on their blind compliance with formalized control from the top. When
organizations do not provide rewards that are valued by members, and when the rewards
are not based on member competence, initiative, and innovative job behavior, employees ’
sense of disempowerment increases (Sims, 1977 ; Szilagyi, 1980 ; see Chapter 12 ). Reward
systems that emphasize innovative/unusual performance and high incentive values have a
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204 JAY A. CONGER AND CRAIG L. PEARCE
significant probability of fostering a greater sense of empowerment, while those that do not
tend to disempower (Kanter, 1979 ; Kanungo, 1987 ; Lawler, 1971 , 1977 ). Finally, when jobs
provide very little challenge and meaning, and when they involve role ambiguity, role con-
flict, and role overload, employees can feel a crippling sense of disempowerment (Lawler
and Finegold, 2000 ; see Chapter 6 ).
Stage 2
To address such conditions identified in stage 1, there are a number of management prac-
tices that can restore or heighten a sense of empowerment (stage 2). For example, at the
organizational level, company policies and cultures can enhance empowerment by empha-
sizing self - determination, internal collaboration (Chapter 18 ), high performance stand-
ards, non - discrimination, and meritocracy. In addition, organizations that provide multiple
sources of loosely committed resources at decentralized or local levels, that structure open
communications systems (see Chapter 23 ), and that create extensive network - forming
devices are more likely to be empowering (Kanter, 1983 ). Jobs that provide task variety,
personal relevance, appropriate autonomy and control, low levels of established routines
and rules, and high advancement prospects (Chapter 6 ) are more likely to empower subor-
dinates (Block, 1987 ; Hackman, Oldham, Janson, and Purdy, 1975 ; Kanter, 1979 ; Oldham,
1976 ; Strauss, 1977 ).
The above practices can be viewed from the different perspectives of either formal/
organizational mechanisms or individual/informal techniques. Organizations require both
types to effectively instill a context of empowerment. For example, when organizations
engage in participation programs, they establish formal systems that empower organiz-
ational members through the sharing of information (Chapter 24 ), formal power, and
authority.
In order for this sharing of power to be effective at the individual level, however,
employees must perceive it as increasing their sense of self - effi cacy – which is accompli shed
largely through the more informal practices of individual managers and in their one - on -
one interactions with subordinates and co - workers. Empowerment initiatives, which rely on
a singular approach such as the delegation of decision making, usually prove to be ineffec-
tive. Rather, initiatives must be supported on multiple levels and by multiple interventions.
In the ideal case, they would involve a highly supportive organizational culture; training
and developmental experiences that heighten one ’s sense of competence; involvement in
goal setting or, especially, in the means to achieve goals, job designs that are highly mean-
ingful to employees; the selection of managers open to empowerment approaches and
proactive in their use; and the selection and promotion of employees whose interpretative
schemes are biased towards constructive and enabling self - assessments (Liden and Arad,
1995 ; Spreitzer et al., 1994 ).
Stage 3
In order to be effective, the empowerment practices outlined above must directly provide
information to employees about personal efficacy, a sense of choice, meaningfulness of the
task, and impact (stage 3). For example, on the dimension of competence or self - effi cacy,
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205 USING EMPOWERMENT TO MOTIVATE PEOPLE
Bandura ( 1986 , 1997 ) has identified four sources of such information (see Chapter 10 ):
enactive attainment, vicarious experience, persuasion/feedback, and emotional arousal
state. Personal efficacy gained through enactive attainment refers to an individual ’ s auth-
entic mastery experience directly related to the job. For example, a manager can allocate
or structure tasks that provide an empowering experience for an individual. When subor-
dinates are trained to perform complex tasks or are given more responsibility in their jobs,
they have the opportunity to increase their efficacy and to receive positive feedback. Initial
success experiences (through successively moderate increments in task complexity and
responsibility along with training to acquire new skills) can make one feel more capable
and, therefore, more empowered.
Empowerment information can also come from the vicarious experiences of observing
similar others, i.e. co - workers, who perform successfully on the job. Very often, a man-
ager ’s exemplary behaviors empower subordinates to believe that they can behave in a
like manner or that they can at least achieve some improvement in their performance. In
addition, words of encouragement, performance feedback, mentoring advice, and other
forms of social persuasion are often used by leaders, managers, and group members to
raise efficacy and provide empowerment information to subordinates and co - workers
(Conger, 1989 ; Pearce and Sims, 2002 ). For instance, leaders may use annual meetings to
provide empowering information in the form of praise and encouragement (Chapter 13 )
for exceptional performance. Through positive performance evaluations, managers may
similarly foster an empowered state. Naturally, this does not imply that one should raise
the performance evaluations of direct reports irrespective of their actual performance.
Falseness breeds distrust (Chapter 21 ).
Leadership practices which have been identified as empowering include: (a) expressing
confidence in subordinates accompanied by high performance expectations (Burke, 1986 ;
Conger, 1989 ; House, 1977 ; Neilsen, 1986 ); (b) fostering opportunities for subordinates to
participate in decision making and goal setting or to create their own jobs (Block, 1987 ;
Burke, 1986 ; Conger, 1989 ; Erez and Arad, 1986 ; House, 1977 ; Kanter, 1979 ; Neilsen,
1986 ; Strauss, 1977 ); (c) providing autonomy from bureaucratic constraints and encourag-
ing independent action (Block, 1987 ; Kanter, 1979 ; Ensley et al., 2006 ; Pearce and Sims,
2002 ); (d) setting inspirational and/or meaningful goals (Bennis and Nanus, 1985 ; Block,
1987 ; Conger and Kanungo, 1998 ; McClelland, 1975 ; Tichy and Devanna, 1986 ); and
(e) encouraging self - development and opportunity thinking (Manz and Sims, 1989 , 2001 ;
Houghton et al., 2003 ).
Finally, personal competence expectations are affected by one ’s emotional arousal state.
Individuals are more likely to feel competent when they are not experiencing strong
negative arousal. Emotional arousal states that result from dysfunctional levels of stress,
fear, anxiety, depression, and so forth, both on and off the job, can lower self - effi cacy
expectations (see Chapter 8 for a discussion of emotional control). Therefore empower-
ment strategies that provide information in the form of emotional support for subordi-
nates and that create a supportive and trusting group atmosphere (Neilsen, 1986 ) can be
effective in strengthening self - efficacy beliefs. For example, employees ’ stress, anxiety, and
tension on the job can be reduced by managers clearly defining employees ’ roles, reducing
information overload, and offering them technical assistance to accomplish job tasks.
Similarly, the impact of depression and self - doubt on subordinates as a result of failures
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206 JAY A. CONGER AND CRAIG L. PEARCE
on the job could be lessened by their supervisor attributing such failures to external and
unstable factors (assuming there are valid reasons for doing so) such as task diffi culty, inad-
equate support systems, and so forth, rather than attributing it to the individual ’s efforts or
abilities (Weiner, 1985 ). Employees, of course, must learn to take personal responsibility
for what they can control.
Stages 4 – 6
As a result of receiving the above forms of information, employees will interpret this
information according to their individual styles of assessment in stage 4. In other words,
personal interpretations will determine whether the information is seen as empowering
or not. Depressed individuals, for example, are less likely to see successes as indicative
of their own competence (Abramson, Seligman, and Teasdale, 1978 ). Others may have
irrational standards of perfection that in turn reduce perceptions of personal empower-
ment. For these very reasons, careful selection of employees is necessary (see Chapters
1 – 3). In the next section where we discuss exceptions, we will describe this assessment
process in greater depth since it directly affects the success of any empowerment initiative.
If information is indeed interpreted as empowering, then the individual will enter a
state of psychological empowerment – and the behavioral effects of empowerment will
be noticed in stage five – followers becoming effective self - leaders (Manz and Sims, 1980 ).
Beyond the behavioral effects of empowerment on individuals are the effects on groups.
As individuals display effective self - leadership, the creation of shared leadership is the
logical next step (stage 6): According to Bligh et al. ( 2006 , p. 20), “ the development of
the self - leadership capabilities of team members sets into motion the meso - level processes
that result in higher collective - levels of trust, potency, and commitment, which in turn
facilitate the sustained sharing of mutual influence within the team that comprises shared
leadership. ”
EXCEPTIONS
We do not advocate empowerment as a new panacea for all organizational woes. Clearly,
there are limitations regarding the efficacy of empowerment. As Locke ( 2003 ) has indi-
cated, there are certain tasks which are the responsibility of the top leader. For example,
Locke ( 2003 , p. 278) noted that “ core values must be pushed from the top down. ” In fact,
we believe there are situations in which empowerment is actually harmful (e.g. it could
create anarchy with respect to core values). Further, empowerment could produce a
state of overconfidence and, in turn, misjudgments on the part of followers. Because of
a sense of false confidence in positive outcomes, employees might persist in efforts that, in
actuality, are tactical or strategic errors.
Similarly, followers might overextend themselves through tasks which are largely
imposs ible to accomplish. Leaders also might use such practices to garner commitment
to tasks which are unethical. The positive personal effects that are felt by followers during
empower ing experiences may blind them to the leader ’s own pragmatic (whatever works
for me today), non - value - driven agenda or the nefarious manipulation of others. (Self -
interest is a good thing if it is tied to proper values.)
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207 USING EMPOWERMENT TO MOTIVATE PEOPLE
There may also be situations where managers and organizations have little latitude to
increase a sense of empowerment. For example, some jobs are highly mechanistic and
routine. No matter what attempts are made at redesign, the jobs remain essentially the
same (but see Chapter 6 ). Serious economic downturns or intense competitive situations
may limit an organization’s ability to provide inspiring goals or appealing rewards other
than simple job security. Trapped in autocratic cultures, managers wishing to empower
may find themselves constrained by the larger system – their efforts at empowerment
largely negated by the overriding culture or design elements of the organization.
Finally, there is the crucial issue of individual differences. For instance, some individuals
may not have the requisite skills, ethical disposition, or conscientiousness necessary for
empowerment. Further, during the process of empowerment, individuals are making sub-
jective assessments about information and specific tasks. One individual may assess the
same information quite differently from another. For example, some styles of assessment
are properly self - enhancing and others are self - debilitating (Peale, 1954 ). As such, what
might be an empowering experience for one individual may be a disempowering or non -
empowering one for another. In the latter case, an individual may have set dysfunctional
standards in the form of absolutistic “ musts ” concerning tasks. They may have the per-
sonal standard of “ Perfection [outside of any rational context] is my goal on all dimensions
of this task. ” Such standards tend to reduce a person’s assessment of their success since
anything short of perfection is seen as failure (Thomas and Velthouse, 1990 ). Followers can
also get trapped in these self - reinforcing cycles. Low personal assessments of their compe-
tence can lead to low initiative and inactivity which further reinforces perceptions of low
success and a sense of low competence (Thomas and Velthouse, 1990 ).
Followers ’ rational confidence in themselves clearly plays a central role. The moti-
vation to undertake any new activity requires a measure of self - confidence on the part
of individuals and a sense of potency (Bligh et al., 2006 ; Gully, Incalcaterra, Joshi, and
Beaubien, 2002), or collective confidence, on the part of groups. If an individual has a
strong foundation of belief in themselves, they are likely to be more optimistic than others
when engaging in activities where information about task assessments are uncertain or
cloudy (Thomas and Velthouse, 1990 ). In addition, followers vary to the degree in which
they invest themselves psychologically in tasks. Termed global meaningfulness, this con-
cept describes an individual ’s overall level of caring or commitment to tasks. People differ
considerably along this dimension (Solomon and Patch, 1970 ). Individuals with low levels
of global meaningfulness tend to experience alienation and are less likely to believe that
new tasks will be meaningful (Thomas and Velthouse, 1990 ).
Given the above psychological dynamics, empowerment interventions must take into
careful consideration the individuals, groups, and tasks involved. For some, their psycho-
logical outlook may prove a serious barrier to empowerment. Instead, it will be their
capacity for self - reflection and learning that will determine, over the long term, whether
they can at some point experience empowerment. At the same time, extended and
persistent efforts at empowerment on the part of leaders will be required under such
circumstances. With some individuals, there may be little that a manager or co - worker
can, or should, do to empower them. This is especially true for followers who are in a
psychologically unbalanced state. Outside professional help – for example, psychotherapy –
may be the only possible option. For this very reason, careful selection and placement are
critical factors.
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208 JAY A. CONGER AND CRAIG L. PEARCE
CASE EXAMPLES
To understand how empowerment works in the real world, we will look first at two posi-
tive examples and one negative/positive example. Each will be drawn from case studies of
actions undertaken by senior organizational leaders to empower their workforces.
Richard Branson, the Virgin Group
As chief executive officer of the Virgin Group (a diversified British company encompass-
ing entertainment/communications businesses and an airline), Richard Branson employs a
variety of means to empower members of the company. At an organizational level, he pre-
serves an entrepreneurial atmosphere through a Japanese - style keiretsu structure whereby
the 500 companies under the Virgin Group operate quasi - independently but collabora tively
in a global network (Kets de Vries and Dick, 1995 ). Once a company reaches a certain
size, it is split into several organizations so that employees retain their sense of identity with
their organization and a small - company, entrepreneurial atmosphere is preserved. At the
individual level, each unit is led by a managing director who has considerable freedom to
lead the business as they see fit and who has an equity position in the company. Decision
making within the company is therefore decentralized. At the same time, senior managers
have access to Branson for advice and guidance and can reach him 24 hours a day (Kets de
Vries and Dick, 1995 ).
To further promote individual entrepreneurship within the company, employees with
attractive ideas for new ventures are provided with seed capital and ownership. As a
result, many of the Virgin companies are the product of employee ideas. A bridal service
division called Virgin Bride, for example, was the idea of a Virgin Airways stewardess to
whom Branson provided “ venture capital. ” The company ’s new ventures allow Branson
to stretch and develop employees by creating more opportunities for upward mobility and
greater responsibility (Kets de Vries and Dick, 1995 ).
A central tenet of the company ’s culture is the importance of employees. Branson’s
maxim is staff first, customers second, and shareholders third, and Branson clearly keeps
an eye on these results. As a result, he has created a culture which is egalitarian, non -
bureaucratic, friendly, and family - like in atmosphere. The culture is one where people
enjoy their work and have fun. It is also one which emphasizes proactivity. As Branson
likes to say, “ We can decide on something in the morning and have it in operation by
the afternoon ” (Kets de Vries and Dick, 1995 ). Taken together, the corporate culture, the
company ’s organizational design/reward systems, and Branson’s leadership style work
effectively to create a cadre of empowered managers.
Jack Welch, General Electric
An executive or manager can put in place mechanisms to promote an empowering organ-
izational culture that values free information sharing through participation and feedback
systems, meaningful jobs through enrichment and goal setting programs, and rewards for
competence and initiative. Jack Welch, former chief executive officer of General Electric,
began his tenure as CEO by delayering the entire corporate bureaucracy. This sent an
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209 USING EMPOWERMENT TO MOTIVATE PEOPLE
impressive signal throughout the organization. He later implemented a program entitled
Work Out throughout the corporation. Work Out addressed roadblocks to employee
empowerment at lower levels of the organization (Bower and Dial, 1993 ; Tichy and
Sherman, 1993 ). The program created forums for employees to speak candidly about
unnecessary work in their jobs and the management of their business units without fear
of retribution from senior managers. Its second objective was to stimulate immediate
action on the issues that surfaced. In two - to three - day sessions of 50 to 100 people, these
forums openly critiqued the management practices and processes in an operation, with
a strong focus specifically on identifying bureaucracy and unproductive behaviors that
impeded employees ’ effectiveness or efficacy. In essence, these forums tackled the barriers
to empowerment. At the end of each session, the unit ’s manager received direct feedback
from employees on their findings and recommendations for action. In response, the rules
stipulated that the manager had to “ on the spot ” accept or reject recommendations at the
meeting or else appoint a team to investigate and provide solutions by an agreed - upon
date. As the process has evolved, issues have since moved on to address more complicated
and structural barriers such as cross - functional processes and departmental boundaries.
At the end of its first two years, some 2000 Work Out sessions were conducted with over
90% of the suggestions acted upon (Bowers and Dial, 1993 ; Tichy and Sherman, 1993 ).
As noted earlier in this chapter, one of the organizational barriers to empowerment
centers on supervisors ’ needs to control. A principal objective behind Work Out was to
redefine this relationship of control between a supervisor and their subordinates. Jack
Welch explains: “ Ultimately, we are talking about redefining the relationship between
boss and subordinate. I want to get to the point where people challenge their bosses every
day: ‘ Why do you require me to do these wasteful things? . . . Trust me to do my job,
and don’t waste all of my time trying to deal with you on the control issue ’ ” (Tichy and
Charan, 1989 , p. 118). What is particularly interesting about this example is that it is an
empowerment intervention instituted by an individual who demonstrates very directive
and demanding leadership. Welch, for example, is known to routinely fire the bottom
5 – 10% of his senior managers for performance below his standards. He also sets well -
defined goals for the organization. At the same time, he is a great believer in the ability
of front - line individuals to address business problems and opportunities, that unnecessary
bureaucracy is a major barrier to empowerment, and that individuals must have the free-
dom to choose the means necessary to reach set goals. It is therefore possible to have both
strong leadership and empowerment.
To and from the depths of despair
Part A. This is the tale of an organization on the brink of disaster and of deep disem-
powerment. The company was known, for decades, as the standard bearer of quality in
their industry. They were a commercial powerhouse in engineering and manufacturing.
Under the rule of a dictatorial leader, however, the company systematically fell apart. This
case is focused on just one of their facilities, located in the mid - Atlantic USA, which was
an exemplar of the company ’s woes. This facility had approximately one million square
feet under roof and employed approximately 5000 individuals. Then corporate leader-
ship decided that payroll expenses were too high and that workforce reductions were an
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210 JAY A. CONGER AND CRAIG L. PEARCE
effective solution. First, they outsourced one of the main product lines of the facility. As
a result, the remaining workers felt deep discontent and disempowerment. A byproduct
was the decline in quality – the very dimension that differentiated the organization in the
marketplace. Soon to follow was a downturn in profitability. According to the general
manager of the facility, “ We began to hemorrhage. ”
Following the outsourcing campaign, the corporate leaders decided that they wanted
to break the union in order to lower wages and restore profi tability. Accordingly, they
transferred a third of the work to a different state, a right - to - work state. The union did
not take that action lying down. They ultimately organized a union in the new location.
According to the president of the union, “ We took that action because the company had
thrown down the gauntlet. And the fight began. The company was fighting their own
workforce . . . and we won. ”
Soon on the heels of the transfer of work to the right - to - work state were contract nego-
tiations with the union, and the company feared a walk - out. This precipitated what came
to be known as “ the strike bank incident. ” The strike bank incident involved the company
ordering employees to work mandatory overtime in order to build up a reserve of parts
to tide them through in the event of a strike. According to the general manager, “ It was
chaos. We had parts hanging from the ceiling. And of course quality went to hell, and we
further alienated the workforce.”
The upshot of all of these draconian management actions were several bomb threats,
which caused the evacuation of the massive facility and continued disruption to the oper-
ations. Meanwhile, the organization continued to tally up record losses. The facility hit
rock bottom when they experienced a murder and a suicide attempt.
Part B . Organizations, just like people, often need to hit rock bottom before they change, and
this is exactly what happened in this case. Following the last incident the general manager
and the president of the union got together and decided to bring in an outside consulting
firm to help them get back on course. The general manager stated, “ We decided to focus on
quality as a way to rebuild our relationship with employees. Nobody can argue with qual-
ity. ” The president of the union was in complete agreement, stating, “ We didn’t want to
fight. We never wanted to fight. We wanted to have pride in our work. ”
Thus they focused on workforce empowerment through several initiatives. It started
with 20 hours of training for every single employee. The training focused on such things
as problem solving, decision making, communication, and teamwork skills. The initial
training was done by the consulting firm. From there on, the training was conducted by
volunteers, from the shop fl oor.
Employees were formed into dozens of what they called Quality Action Teams. The teams
were empowered to take on the quality problems facing the firm. Naturally, the transi tion was
not easy for all of the managers (now called team leaders) involved. For example, the general
manager recalled, “ We had three guys who just couldn’t make the transition. We told them
‘ No more hard ass, now you ’re a coach and a facilitator. ’ They just didn’t want to make the
adjustment. And lucky for them, we were able to give them early retirement. ”
Over time, the transition to an empowered workforce took hold. The plant saw steady
rises in quality, productivity, and profitability. About a year into the process, one incident
marked the turning point. The general manager recounted, “ We started up a machine – it
didn’t work – it shut down our assembly plant. So we put together a team, and these
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211 USING EMPOWERMENT TO MOTIVATE PEOPLE
guys were incredible. They were truly a super team. Every one of those guys showed real
leadership, and in the end they had the machine back up and running. I put their suc-
cess story up on the marquee, at the entrance to the plant to give them some recognition.
That’s when everybody realized what a little teamwork could do. ”
According to the union president, “ In the past, common sense never entered into
the picture. It was ‘ Do it the way we’re telling you to do it because we’re the managers
and you ’re the employees. ’ Now each member of the team is expected to contribute
to the leadership of the team. We’ve come a long way.” One of the shop fl oor employ-
ees sum marized the transition to empowerment the best by stating, “ I fi nally feel
liberated . . . yeah liberated, that ’s the word for it. For all these years I was just doing what
I was told to do. Now Bob [the team leader] asks me what I think we should do. My ideas
fi nally matter and it feels great! ”
In the end, quality was improved by a factor of 10, the workforce was positively
engaged, and the company returned to solid profitability. In fact, they ultimately, after
about three years onto the road to empowerment, won their State Senate Productivity
Award – analogous to the Malcolm Baldridge Award at the national level – an award the
general manager and union president alike credit their success to the empowerment of
the workforce.
This case is an excerpt from Share the Lead by Craig L. Pearce, Charles C. Manz and
Henry P Sims Jr, reproduced with permission from Stanford University Press.
CONCLUSION
As readers will have realized by now, empowerment holds remarkable opportunities.
We believe that we are in an era that is demanding far more empowerment, where
power is truly shared across a greater number of individuals, as well as up and down
the hierarchy. Only when we have achieved a greater appreciation for the positive
outcomes associated with empowerment and a real understanding of how it works
effectively, will we be able to harness its full potential to contribute to organizational
performance. Only then will empowerment also stand as an equal to traditional
notions of leadership, the solitary individual in a position of authority, where
followers are simply interchangeable “ parts. ”
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EXERCISES
Your empowerment profile
Step 1: Complete the following questionnaire.
The following items ask you to assess how you experience your work setting. If you are
not currently working, think back to a previous job, or internship. Circle the number that
most accurately depicts your assessment where:
1 Strongly disagree 3 Neutral 7 Strongly agree
1. The work I do is very important to me ……………………… 1 2 3 4 5 6 7
2. I am confi dent about my ability to do my job ………………. 1 2 3 4 5 6 7
3. I have signifi cant autonomy in determining how I do
my job ………………………………………………………..
1 2 3 4 5 6 7
4. My impact on what happens in my department is
large ………………………………………………………….
1 2 3 4 5 6 7
5. My job activities are personally meaningful to me ………….. 1 2 3 4 5 6 7
6. I am self-assured about my capabilities to perform my work
activities ……………………………………………………... 1 2 3 4 5 6 7
7. I can decide on my own how to go about doing my
work ……………………………..…………………………... 1 2 3 4 5 6 7
8. I have a great deal of control over what happens in my
department…………………………………………………... 1 2 3 4 5 6 7
c11.indd 215 6/22/09 1:42:36 PM
215 USING EMPOWERMENT TO MOTIVATE PEOPLE
9. The work I do is meaningful to me ………………………….
10. I have mastered the skills necessary for my job ………………
11. I have considerable opportunity for independence and freedom
in how I do my job………………………………………………
12. I have signifi cant infl uence over what happens in my
department……………………………………………………
1 2 3 4 5 6 7
1 2 3 4 5 6 7
1 2 3 4 5 6 7
1 2 3 4 5 6 7
Step 2: Add the totals of the following items:
1 5 9 –––––– 3 –––––– Experienced meaningfulness score
2 6 10 –––––– 3 –––––– Experienced competence score
3 7 11 –––––– 3 –––––– Experienced self - determination score
4 8 12 –––––– 3 –––––– Experienced impact score
Step 3 : Compare your scores to the following averages:
Construct
Industrial company Insurance company
Mean Std. dev. Mean Std. dev.
Experienced meaningfulness 5.89 0.88 5.87 0.85
Experienced competence 5.69 0.98 6.05 0.79
Experienced self-determination 5.51 1.00 5.39 1.19
Experienced impact 5.52 1.02 3.80 1.50
Step 4: In small groups, or with the entire class, discuss how your scores compare. Also,
explore good examples of how empowerment has been developed in your organiz ation,
as well as how your organizations could approach empowerment more effectively. As
part of this discussion, explore both the appropriate applications of empowerment
as well as its limits and potential liabilities. Finally, explore how empowering each of
you want to be as a leader.
Analysis of the film “ Dead Poets Society ”
Instructions. The film, ideally, should be assigned to be viewed outside of class time. During
class the instructor will queue up several scenes to prompt discussion. Below is a list of dis-
cussion questions to guide the interpretation of the fi lm:
◆ Under what conditions are individuals willing and motivated to accept empowerment?
◆ What is the effect of individual differences in empowerment?
c11.indd 216 6/22/09 1:42:36 PM
216 JAY A. CONGER AND CRAIG L. PEARCE
◆ What are the effects of specific leader behaviors on followers, and do the effects dif-
fer by follower?
◆ What is the importance of background factors, such as the norms in place in the
institution or the role of other infl uential individuals to the process?
◆ How does leadership come to be shared and how do the roles transition between
various characters?
◆ How can empowerment go awry if followers do not have sufficient skills to make
sound judgment, and how can you attempt to prevent this from happening?
◆ How do we apply the principles we have been discussing to organizations?
Film description. The fi lm Dead Poets Society is set at a private school – the Welton Academy
for boys. During their first class with their English teacher, Mr. Keating, the boys are taken
out into the hallway where he tells them they are bright individuals, with the power to
choose their own path – to essentially become self - leaders. This is in stark contrast to the
teaching norms at the academy. As such, Mr. Keating clearly demonstrates empowering
leader behavior. As the movie progresses, we steadily see the boys take on this newfound
empowerment and become effective self - leaders.
One day, one of the boys finds an old yearbook with Mr. Keating in it, where
Mr. Keating listed the Dead Poets Society (DPS) as one of his important school activities.
When questioned about it, Mr. Keating replies that the DPS was dedicated to fi nding
meaning, that the members would sit in a cave near a pond and recite poetry. Subsequently,
the boys decide to start up the DPS once again, ultimately demonstrating effective shared
leadership in the process.
Unfortunately, we also get to witness empowerment gone awry, when the boys abuse
their empowerment and begin drinking, smoking, going to parties, and otherwise running
amok. Upon finding out about this, Mr. Keating counsels the boys to be wise, not foolish,
with their empowerment.
In a plot twist, Mr. Keating is inappropriately made a scapegoat when one of the boys
commits suicide, and he is terminated from his position. When Mr. Keating enters the class-
room for the final time, several of the boys stand on their desks and call him O Captain!,
My Captain!, as a way of demonstrating their sincere appreciation for how he empowered
them to grow and expand their lives. The final message of the film is that people should
think for themselves and be capable self - leaders, while empowering others in like kind.
c12.indd 217 6/17/09 3:16:05 PM
12
Pay for Performance
CATHY C. DURHAM AND KATHRYN M. BARTOL
THE PRINCIPLE
Our principle is pay for performance. This principle involves providing monetary rewards
through carefully designed compensation systems that base pay on measured performance
within the control of participants. It also includes incorporating appropriate concerns for
procedural and distributive justice. In most situations, properly designed pay - for- performance
systems will lead to better performance results.
Well - designed pay - for - performance systems make major contributions to performance
through two main mechanisms. First, they positively influence the motivation to perform.
Second, they impact the attraction and retention patterns of organizations (i.e., who joins
and who remains), thereby affecting the caliber of individuals available to perform.
A number of different pay delivery plans qualify as pay - for- performance systems,
although they vary widely with respect to how closely they tie pay to performance. Pay - for -
performance systems can deliver monetary rewards at the individual, small group, and/or
division or organizational level. Evidence suggests that pay for performance at each of
these levels can positively impact performance.
Individual level
At the individual level, there are three major types of pay - for- performance systems: tra-
ditional incentive systems, variable pay configurations, and merit pay plans. Traditional incentive plans
include piece - rate plans and sales commissions. With piece - rate incentive plans, an employee is
paid a specified rate for each unit produced or each service provided. Mitchell, Lewin, and
Lawler ( 1990 ) estimate that proper use of piece - rate plans leads to performance gains in
the 10 – 15% range. Based on their review of the literature, Locke, Feren, McCaleb, Shaw,
and Denny (1980) concluded that the median productivity improvement from piece - rate
plans is 30%. A meta - analysis involving mainly piece - rate pay found that fi nancial incentives
are associated with higher performance in terms of quantity and also found no detrimental
c12.indd 218 6/17/09 3:16:06 PM
218 CATHY C. DURHAM AND KATHRYN M. BARTOL
impact on quality ( Jenkins, Mitra, Gupta, and Shaw, 1998 ). The other traditional incentive,
the commission, is a sales incentive that is typically expressed as a percentage of sales dol-
lars, a percentage of gross profit margins, or some dollar amount for each unit sold (Colletti
and Cichelli, 1993 ). The available research indicates that salespeople tend to prefer com-
missions over other forms of reward (Lopez, Hopkins, and Raymond, 2006 ) and can be
effectively motivated by them (e.g., Banker, Lee, Potter, and Srinivasan, 1996 ; Ford, Walker,
and Churchhill, 1985 ; Harrison, Virick, and William, 1996 ).
The second major type of individual level pay - for- performance plan, variable pay , is
performance - related compensation that does not permanently increase base pay and that
must be re- earned to be received again. Because base pay tends to move up more slowly
with variable pay plans, the amount of bonus that can be earned needs to be substan tial to
make up for the fact that part of the pay is “ at risk ” (Schuster and Zingheim, 1996 ). The
risk stems from the possibility that desired performance might not be achieved and therefore
the pay not earned. The piece - rate and commission pay plans discussed above actually con-
stitute forms of variable pay, albeit forms in which a greater proportion of pay is typically
tied to performance than is the case with newer forms of variable pay. According to a Hewitt
survey of Fortune 1000 companies, a growing number of employers are moving to variable
pay: The portion of US companies offering one or more variable pay plans rose from 51%
in 1991 to 78% in 2005 (Dean, 2006 ). Research suggests that variable pay plans are useful
in boosting performance (e.g., Chung and Vickery, 1976 ; Lee, 1988 ; Smilko and Van Neck,
2004 ; Yukl and Latham, 1975 ).
A form of variable pay that is currently popular is a lump - sum bonus for achieving par-
ticular goals. Locke ( 2004 ) identifies four methods of linking bonuses to goals: assigning
stretch goals and paying bonuses only if the goals are achieved , having multiple goal levels
and corresponding bonuses that increase as higher goals are met , offering bonuses that
grow incrementally as performance improves (with no upper limit) , and setting specifi c,
challenging goals but making decisions about bonuses after the fact so that contextual fac-
tors can be taken into account. Locke notes that each choice has its pros and cons. For
example, bonuses paid only when stretch goals are met, although highly motivating, might
also encourage employees to take shortcuts or cheat. Also, they could be discouraging for
those who approach but do not reach the goals. Having either multiple or continuous goal
and bonus levels (which are similar to piece - rate pay plus goals) may be less likely to result
in cheating or gaming, but it is unclear whether such approaches can motivate the highest
levels of performance. Setting goals but determin ing pay after the fact, while accounting
for situational factors, requires bosses to understand the full context of employees ’ per-
formance more than they often can do. Nonetheless, this method has been the approach
of choice at both Microsoft (Shaw, 2004 ) and General Electric (Kerr and Landauer, 2004 ).
Lacking comparative research to guide choices, Locke highlights the need for more exper-
imental studies about how best to link bonuses to goals.
The third major type of individual level pay - for- performance plan, merit pay , rewards
individuals for past work behaviors and outcomes by adding dollar amounts to their
base pay. Merit pay is the most widely used pay system in US organizations (Bretz,
Milkovich, and Read, 1992 ; O ’ Dell, 1987 ). Milkovich and Newman ( 2008 ) report that
90% of US firms reward employees through merit pay. Based on a review of 25 stud-
ies, Heneman ( 1992 ) concludes that merit pay plans appear to be moderately effective
in influencing performance. Taking a longer- term view, Harris, Gilbreath, and Sunday
c12.indd 219 6/17/09 3:16:06 PM
219 PAY FOR PERFORMANCE
( 1998 ) provide evidence that the connection between merit pay and performance may
be greater than short - term studies can detect because the cumulative effects of various
types of merit pay adjustments linked to performance, such as those related to promo-
tions, can be substantial.
Team level
In addition to pay for performance at the individual level, there is considerable interest in
pay - for- performance plans focused on small groups or teams (Parker, McAdams, and
Zielinski, 2000 ). Such pay plans provide monetary rewards based on the measured per-
formance of the group or team. Small work groups or teams are official (designated or
recognized by management) multi - person work units composed of individuals who oper-
ate interdependently in the performance of tasks that affect others associated within the
organization (Guzzo and Dickson, 1996 ; Hackman, 1987 ). One survey found that almost
70% of Fortune 1000 companies are using some type of work group or team incentives
(Lawler, Mohrman, and Ledford, 1995 ). Usage in smaller organizations may be less, with
one survey showing that 35% of the 140 companies responding, most of which had 2000
or less employees, reported using team rewards (McClurg, 2001 ). Evidence suggests that
performance gains can be associated with the use of monetary rewards for groups (Cotton
and Cook, 1982 ; Gomez - Mejia and Balkin, 1989 ; Quigley, Tesluk, Locke, and Bartol,
2007 ; Wageman and Baker, 1997 ), but that the results are likely to be heavily infl uenced
by situational factors (Balkin and Montemayor, 2000 ; DeMatteo, Eby, and Sundstrom,
1998 ; Lawler, 2003 ). Increased interest in team pay is also emerging in the executive
suite, particularly with respect to top management teams (Devers, Cannella, Reilly, and
Yoder, 2007 ).
Organizational level
At the organizational level, three pay systems that potentially link pay and performance
are gainsharing, profi t sharing, and stock options. Gainsharing is a compensation plan in which an
organization shares with employees a portion of the added earnings obtained through
their collective increases in productivity (Henderson, 1997 ) or the achievement of other
goals, such as customer satisfaction with quality (Gerhart and Rynes, 2003 ). Such plans
usually involve a significant portion of an organization’s employees and possibly all. In
large organizations, plans may apply to plants, divisions, or other signifi cant subsystems
of the organization. In recent years, gainsharing has been growing in popularity, extend-
ing its reach beyond traditional industrial settings to other realms such as health care ( Jain
and Roble, 2008 ; Patel, 2006 ). The available evidence on gainsharing indicates that such
plans have generally led to gains in productivity (Welbourne and Gomez - Mejia, 1995 ), as
well as to other positive outcomes, such as decreases in absenteeism and the number of
grievances (Arthur and Jelf, 1999 ).
The second type of organizational level pay system aimed at performance is profi t
sharing, which provides payments to employees based on the profitability of the business.
Payments can be made through current distribution plans (paid in cash), deferred plans
(paid toward retirement), or a combination of both, although most companies establish
deferred plans because of the associated tax advantages. According to one estimate, more
c12.indd 220 6/17/09 3:16:06 PM
220 CATHY C. DURHAM AND KATHRYN M. BARTOL
than 60% of Fortune 1000 companies have profi t sharing plans (Lawler et al., 1995 ). Data
supporting the performance effects of profit sharing plans is somewhat unclear. Kruse
( 1993 ) found that productivity growth in firms using profit sharing was 3.5 – 5.0% higher
than in firms that did not use profit sharing. However, Kim ( 1998 ) found that profi t shar-
ing companies tend to have higher labor costs than other companies, thereby erasing any
advantage of profit sharing. There are some weaknesses inherent in profi t sharing plans
as a direct means of boosting performance. One is that it can be somewhat diffi cult to
establish a clear connection (sometimes referred to as “ line of sight ” ) between individual
actions and impact on profits, especially in large organizations. Evidence for this is Kruse ’ s
( 1993 ) finding that annual productivity growth was greater in smaller profit sharing com-
panies than in larger ones (11 – 17% productivity growth in companies having fewer than
775 employees, versus 0.0 – 6.9% in companies having 775 or more). Another weakness is
that accounting and financial management practices and other factors outside employees ’
control can also impact the bottom line. Finally, the deferred nature of many of these
plans may not provide strong valence with respect to motivating performance. Indeed,
Kruse ( 1993 ) found that productivity growth was higher for plans paying cash rewards
than for those making deferred payments.
A third type of organizational level reward system is employee stock ownership. One
study of Fortune 1000 companies showed that 71% had stock ownership programs of
some type (Lawler et al., 1995 ). During the 1990s, the most rapidly growing approach
was via stock options, which give employees the right to purchase a specifi c amount of
stock at a designated price over a specified time period (Brandes, Dharwadkar, Lemesis,
and Heisler, 2003 ). The basic rationale is that employees will be more concerned about
the long - term success of the organization and increase their efforts if they can reap the
benefits as reflected in the rising price of the organization’s stock. Additionally, extend-
ing ownership can both attract new talent and enhance perceptions of fairness (and thus
retention) in current employees. In 2000, a study of 490 organizations reported that com-
panies with stock option plans that were broadly dispersed (beyond the executive level)
performed better and had higher average compensation levels than companies without
broad - based plans, and also that increases in productivity seemed to counterbalance
any dilution of earnings per share that occurred when the options were exercised (Sesil,
Kroumova, Kruse, and Blasi, 2000 ).
Since 2000, however, conditions have changed radically. In a much- debated ruling
in 2005, the Financial Accounting Standards Board required companies to recognize
stock options as a cost on their income statements in the year they were awarded rather
than merely list them in the footnotes – a change that diluted earnings per share in
the year options were granted and rendered options less attractive to many employers
(Deshmukh, Howe, and Luft, 2008 ). Further, the value of options plummeted early in
the decade and then again beginning in 2007, when a crisis in the mortgage markets
ultimately led to the historic “ Wall Street bailout ” by the US government in 2008 and
to widespread fear of a steep global recession. When an option is “ underwater ” (when
its exercise price exceeds the current market price), the value is neutralized and employ-
ees ’ anticipated wealth – along with any motivational potential that might have existed
in holding the option – evaporates (Delves, 2001 ). And, even in times of rising stock
prices, the effect may be less than hoped for. One study found that when stock prices
c12.indd 221 6/17/09 3:16:07 PM
221 PAY FOR PERFORMANCE
have risen above the option price, lower- level employees tend to exercise their options
shortly after vesting, a factor that may truncate some of the longer- term motivational
potential of the incentive (Huddart and Lang, 1996 ).
Overall effects
There is some debate regarding whether there are best practices that are applicable to
most organizations (Gerhart, Trevor, and Graham, 1996 ; Huselid, 1995 ), or whether it
is important to match pay systems to particular strategies (Montemayor, 1994 ; Youndt,
Snell, Dean, and Lepak, 1996 ). The weight of evidence seems to be shifting toward the
strategy argument (e.g., Shaw, Gupta, and Delery, 2001 ; Yanador and Marler, 2006 ), but
more research needs to be done on how best to align pay systems with strategy to ulti-
mately enhance organizational performance (Gerhart, 2000).
The direct impact of pay plans on performance is not the only effect to consider. Grow-
ing evidence suggests that there are indirect pay plan effects stemming from infl uences
on attraction and retention patterns in organizations. For example, several studies support the
notion that the level of compensation influences attraction to organizations (e.g., Saks,
Wiesner, and Summers, 1996 ; Schwoerer and Rosen, 1989 ; Williams and Dreher, 1992 ).
Moreover, individuals appear to be more attracted to organizations in which the pay sys-
tem rewards individual rather than group performance and for job outcomes rather than
acquiring new skills (Cable and Judge, 1994 ; Highhouse, Steierwalt, Bachiochi, Elder, and
Fisher, 1999 ). Individuals may also be more attracted to organizations that offer fi xed pay,
rather than variable pay, unless there is sufficient upside potential to balance the pay risk
(Bartol and Locke, 2000 ).
Pay for performance can also have a positive effect on retention. Research indicates
positive relationships between employee perceptions of pay for performance and both pay
satisfaction (Heneman, Greenberger, and Strasser, 1988 ; Huber, Seybolt, and Venemon,
1992 ; Williams, McDaniel, and Nguyen, 2006 ) and job satisfaction (Kopelman, 1976 ), fac-
tors that are related to intention to leave and turnover (Chapter 7 ). General level of pay is
also a factor encouraging retention (Batt, 2002 ). There is some evidence that profi t shar-
ing is an important determinant of organizational commitment (Florkowski and Schuster,
1992 ; Coyle - Shapiro, Morrow, Richardson, and Dunn, 2002 ), which has been shown to
be related to lower turnover. Based on a meta - analysis, Williams and Livingstone ( 1994 )
argue that pay - for- performance systems encourage better performers to remain with the
organization while inducing poorer performers to leave. One caveat is that a high degree
of pay dispersion, in which pay is much higher for relatively few employees at the top of
the pay structure than for others, can lead to higher probabilities of turnover among man-
agers (Bloom and Michel, 2002 ). These negative effects seem to be lessened when pay levels
generally are high (Brown, Sturman, and Simmering, 2003 ).
Interestingly, due to the flexibility and control over labor costs that it provides, variable
pay may also reduce turnover. By having more money allocated to bonuses or other forms
of variable pay, an organization can shrink its payroll costs during downturns rather than
downsize. Gerhart and Trevor ( 1996 ) provide evidence that variable pay plans lessen organiz-
ational employment variability, allowing for greater employment stability for employees
and their organizations.
c12.indd 222 6/17/09 3:16:07 PM
222 CATHY C. DURHAM AND KATHRYN M. BARTOL
WHAT IS REQUIRED TO MAKE THE PRINCIPLE WORK?
Define performance
First, it is essential to identify explicitly what performance is desired. Clearly defi ning
performance, however, requires looking beyond individual jobs and thinking strategically
about the organization as a whole. It means developing a business model based on what
drives the business (e.g., customer satisfaction), after which goals can be set at the various
levels of the organization and determinations made about what will be rewarded. Without
a business model (or with the wrong one), management risks setting goals and rewarding
employees for the wrong things – and finding its employees doing those wrong things very
efficiently, to the organization’s detriment. Focusing on what drives the business leads to
the setting of appropriate performance goals for individual employees at all organizational
levels. Then, the act of tying incentives to the achievement of those goals will have not
only motivational but also informational value, because people will receive a clear message
about what specific behaviors and/or outcomes are expected via communications about
the reward system. A temptation to resist is that of defining performance in terms of job
aspects that are easily quantifiable, thereby ignoring job dimensions that may be critically
important but difficult to measure. This can lead an organization to fall into the trap of
“ rewarding A while hoping for B ” (Kerr, 1995 ). For pay for performance to be effective,
strategically important job dimensions – even hard - to - measure ones – must be identifi ed,
communicated, assessed, and rewarded.
Communicate
Because it is impossible to be motivated by incentives one does not grasp, it is critically
important not only to design a pay plan that is understandable but also to communicate
both clearly and frequently how the program works and what employees must do to bring
about the results that will trigger a payout. Communication also implies providing feed-
back along the way about progress toward targets (Smilko and Van Neck, 2004 ). Young,
Burgess, and White ( 2007 ) describe the effects of a failure to communicate in a pay - for-
quality project for physicians. Participants found the rules complicated, failed to fully
understand the plan, and were not sufficiently engaged by meager attempts to explain it.
Thus, although 75% of those eligible received a bonus payment in the first year, very few
knew whether they had received their payment or, if they did, realized that it was for their
performance on the program ’s quality measures. Some physicians were so unaware of the
financial rewards available to them that they discarded, unopened, the mail that included
their bonus checks.
Ensure competence
Employees must have the appropriate knowledge, skills and abilities (KSAs), and self -
efficacy (Chapter 10 ) to perform at the desired level. Instituting pay for performance is
a futile exercise if employees are unable to perform at the level required to receive the
reward. Hiring people who are efficacious and who possess (or can readily obtain through
training) the relevant KSAs is essential.
c12.indd 223 6/17/09 3:16:07 PM
223 PAY FOR PERFORMANCE
Make pay systems commensurate with employees ’ values
Pay for performance will only work if the rewards being offered are valued and the
amount is viewed as sufficient, given what employees are being asked to accomplish.
Employers can generally assume that money is a value to their employees, both practi-
cally and symbolically. Some employees, however, may not value the incremental gain
being offered for high - level performance if the amount is viewed as paltry and thus not
worth the additional effort. Further, a pay system can fail if it is perceived as undermining
employees ’ other values. For example, individuals may be uninterested in obtaining even
a substantial amount of additional pay if they believe that achieving performance goals
means sacrificing greater personal values, such as time to pursue their own interests (e.g.,
family life), a low - stress work environment, or a commitment to high - quality work or to
standards of ethical behavior.
Use non - financial motivators too
Most employers assume that money is an effective motivator because it enables employ-
ees to buy things that they want or need. Also, money is important from a justice stand-
point, giving high performers what is due them for their exceptional contributions to the
organization’s success. Nonetheless, exclusive reliance on financial incentives would be
an unwise policy because it would ignore other important sources of work motivation.
Non - monetary motivators include a diverse assortment of activities, such as providing
interesting and important work assignments (Chapter 6 ), engendering commitment to
the realization of a vision (or to a visionary leader; Chapter 20 ), assigning challenging
goals in conjunction with ongoing performance feedback (Chapter 9 ), granting auton-
omy regarding how a job is accomplished (Chapter 11 ), providing public and/or pri-
vate recognition for outstanding contributions (Chapter 13 ), or simply enabling one to do
work that one loves.
Use money in conjunction with intrinsic motivation
Amabile ( 1993 ) argues that it is possible to achieve “ motivational synergy” by encouraging
both intrinsic and extrinsic motivation (see Chapter 26 ). She posits that intrinsic motivation
arises from the value of the work itself to the person. It can be fostered through such
measures as matching employees to tasks on the basis of their skills and interests, design-
ing work to be optimally challenging, and bringing together diverse individuals in high -
performing work teams. Amabile further suggests that, when creativity is particularly
important, it may be best to hold off heavily emphasizing extrinsic motivators during the
problem presentation and idea generation stages when intrinsic motivation appears to be
most important. Extrinsic factors may be particularly helpful during the sometimes - diffi cult
validation and implementation stages. A meta - analytic study (Eisenberger and Cameron,
1996 ) and a set of laboratory and field studies (Eisenberger, Rhoades, and Cameron, 1999 )
also indicated that tangible rewards can enhance, rather than undermine, the effects of
intrinsic motivation. Some (e.g., Ryan and Deci, 2000 ), however, contest this view.
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224 CATHY C. DURHAM AND KATHRYN M. BARTOL
Target the appropriate organizational level
Performance - based pay must be at the appropriate level. Increasingly, firms are reward-
ing performance at the group and/or organizational levels rather than at the individual
level alone, in hopes of boosting organizational performance through enhanced infor-
mation sharing, group decision making, and teamwork (Bartol and Hagmann, 1992 ;
Parker et al., 2000 ). Lawler (1971) argues that the distinction between individual and
group pay plans is important because individual and group plans are viewed differently
by employees and have different effects. A key decision for management, then, concerns
whether incentive pay should be based on individual or group performance. Further, if
the organization chooses to reward group performance, decisions must be made about
what constitutes a “ group ” for performance - measurement purposes. For example, will
group - based pay be based on the performance of a team, a work unit, a division, or the
entire organization?
There has been little actual research to offer guidance regarding the level of perform-
ance to which incentives should be tied, although several views have been advanced
by compensation experts (e.g., Gomez - Mejia and Balkin, 1992 ; Mitchell et al., 1990 ;
Montemayor, 1994 ). Key factors that should be considered when making this important
decision include:
◆
Nature of the task. Pay for performance at the individual level is considered most
appropriate when the work is designed for individuals, where the need for integra-
tion with others is negligible, where group performance means only the sum of
members ’ individual performances, or where the work is simple, repetitive, and
stable. For sequential teams that perform various tasks in a predetermined order,
so that group performance cannot exceed that of the lowest individual member, it
has been recommended that base pay be skill based, and team incentives be team
bonuses with payouts distributed as a percentage of base pay. Alternatively, group -
based incentive programs, through which all members receive equal shares of a
team bonus, are generally considered appropriate when teams are composed of
individuals from the same organizational level, when members have complemen-
tary roles and must depend upon each other and interact intensively to accom-
plish their work, so that group performance is enhanced by cooperation, and when
the nature of the technology and workflows allow for the identification of distinct
groups that are relatively independent of one another. Emerging research (Beersma,
Hollenbeck, Humphrey, Moon, Conlon, and Ilgen, 2003 ) suggests that, when highly
interdependent teams have members who are high in extraversion and high in
agreeableness, they produce more accurate work under a cooperative reward system
than teams with members who are relatively low on these personality dimensions.
The increased accuracy, which was found to be due largely to the greater sharing of
information (Chapters 17 and 18 ), came at the expense of speed. The decrement in
speed was also related to a tendency for free riding by the lowest performer under
the cooperative reward scheme. In contrast, a competitive reward system led to
greater speed, but lower accuracy, regardless of the personalities of members. When
the work is highly interdependent and a cooperative reward system is in place, it
may be helpful to select individuals who are high on extraversion and agreeableness.
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225 PAY FOR PERFORMANCE
Some coaching of the team (Chapter 15 ) may help the group develop norms that
discourage free riding (Hackman and Wageman, 2005 ), thus enabling accurate work
with less decrement in speed.
◆ Ability to measure performance. Good performance measures are critically important
in any pay - for- performance plan. Pfeffer ( 1998 ) argues that performance can often
be more reliably assessed at aggregate than at individual levels. He concludes
that individual incentive pay should be replaced by collective rewards based
on organizational or subunit performance that highlight the interdependence
among organizational members. Although many are unwilling to go as far as
Pfeffer in discounting the potential value of individual incentives, most agree that
group incentives are a suitable alternative when the identification of individual con-
tributors is diffi cult due to the nature of the task. For gainsharing plans in particular,
it is not only necessary that there be good performance measures for the unit or
plant, but also that there be a reliable performance history in order to develop a
gainsharing formula. When group performance is rewarded with gainsharing, how-
ever, it is nonetheless important, particularly in Western cultures, to provide a means
for identifying individual contributions to the group effort (e.g., through peer evalu-
ations), so that members keep in mind their accountability at both the individual
and group levels.
◆ Organizational culture. Group incentive plans are best suited to situations in which
the organizational culture emphasizes group achievements (Chapter 33 ). Group
incentives work best when free riding is unlikely (e.g., because members hold each
other accountable or because employees are professionals who possess high intrinsic
motivation). If a corporate culture is strongly individualistic and competitive, group
plans such as team incentives will likely encounter considerable resistance from
organizational members accustomed to focusing on individual accomplishments
and/or may lead to lower levels of cooperative behavior (Hill, Bartol, Tesluk, and
Langa, 2009).
◆ Management ’ s purpose. Group incentives are recommended in situations in which there
is a need to align the interests of multiple individuals into a common goal, or when
management wishes to foster entrepreneurship at the group level. At the organiz-
ational level, profit sharing is often used to communicate the importance of the
firm ’ s financial performance to employees, heightening their awareness of the over-
all financial performance of the organization by making a portion of their pay vary
with it. This is thought to be most motivating when employees believe that they can
substantially influence the profit measure, such as in smaller organizations and those
in which the means by which profi ts are achieved are well understood.
Some have proposed mixed models, whereby incentive pay is based partially on indi-
vidual measures of performance and partially on group measures. Wageman ( 1995 ),
however, found that teams having mixed forms of reward (i.e., rewards based on both
indi vidual and group performance), mixed tasks (i.e., some tasks performed solely by indi-
vi duals and some by interdependent groups), or both, had lower performance than those
with task and pay designs that were clearly either individual level or team level. She pro-
poses that mixed tasks and rewards may lead to inferior performance by adding a group
element to what is primarily an individual task, thereby undermining attention to the task.
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226 CATHY C. DURHAM AND KATHRYN M. BARTOL
It also may be more difficult to develop supporting norms for cooperation in the team
(Quigley et al., 2007 ). In addition, teams executing mixed tasks may need more time to
adjust because of the greater complexity of tasks that have both individual and group per-
formance components. In fact, one study (Johnson, Hollenbeck, Humphrey, Ilgen, Jundt,
and Meyer, 2006 ) has shown that it even may be more difficult for a team to shift from
a competitive to a cooperative reward structure than from cooperative to a competitive
one. When a competitive reward structure was shifted to a cooperative one, team mem-
bers seem to engage in “ cutthroat cooperation ” in which team members retained much of
their competitive behavior within the new reward systems intended to foster cooperation.
Another complicating factor is that some workers may prefer individual pay over team -
based pay (Cable and Judge, 1994 ; Haines and Taggar, 2006 ; Shaw, Duffy, and Stark,
2001 ). The question remains, then, how best (or when) to mix individual - and group -
based incentive plans.
Make pay commensurate with the level of risk employees are required to bear
Risk refers to uncertainty about outcomes (Sitkin and Pablo, 1992 ), and, by defi nition,
pay - for- performance systems involve uncertain outcomes for employees. Employees tend
to be risk - averse concerning pay because they have no way of minimizing their income
risk through diversifi cation, as investors are able to do with their stock portfolios.
At least four factors can affect employees ’ perceptions concerning the riskiness of a
pay - for- performance plan. First is the proportion of employee pay that is performance
based. Although the average percentage of variable pay in the USA is only 5%, the
proportion ranges widely, from 0 to 70% (and even to 100% for salespersons; Gomez -
Mejia and Balkin, 1992 ). The higher the proportion of variable pay, the more risk the
employee must bear, in a tradeoff between income security and the potential for higher
earnings (Gomez - Mejia, Balkin, and Cardy, 1998 ). At some point the level of risk may
be perceived as so great that it would be unacceptable to the majority of employees,
regardless of the potential for high pay. The second factor that influences employees ’
perceptions of risk is their self - efficacy (Chapter 10 ) that they can achieve the perform-
ance goals on which pay is contingent. Those who are confident of their ability to
perform at a high level should perceive contingent pay as less risky than those who are
less confident of their ability. Third, to the extent that the performance measure on
which pay is based is influenced by factors outside individual employees ’ control (e.g.,
technology or macroeconomic factors affecting profits or stock prices), perceived risk
for the employee is increased. For example, CEOs run the risk of losing income (and
even employment) if the companies for which they are responsible are unsuccessful –
whatever the cause. A fourth factor affecting employee perceptions of risk is the
amount of time between performance and the receipt of rewards. Because the future is
uncertain, deferred rewards involve more risk than immediate ones. For employees to
accept a pay system offering long - term rewards, they must be willing to delay gratifi-
cation in the hopes of greater (but uncertain) future returns. Research by Shelley
( 1993 ) indicates that managers may expect to be compensated for the loss of immedi-
ate compensation by the payment of a premium that is far in excess of the amount the
time value of money would imply – a finding that is probably true of non - managerial
employees as well.
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227PAY FOR PERFORMANCE
POSSIBLE EXCEPTIONS TO THE PRINCIPLE OF
PAYING FOR PERFORMANCE
It does not make sense for an employer to offer to pay employees more unless the employer
will actually get more in the bargain. When, therefore, might it be unwise (or even counter-
productive) to offer incentives?
When employees are learning
In learning situations, when employees are attempting to “ get up to speed ” on a new task,
offering performance - based pay may frustrate more than it motivates. Performance fail-
ures that are a natural part of learning may be exaggerated in the learner ’s mind because
of failure not only to perform the task but also to obtain the monetary reward. Thus, it is
unwise to pay for performance until employees are able to perform at the desired level.
When the employer can monitor
Agency theory ( Jensen and Meckling, 1976 ) suggests that financial incentives are unnecess-
ary when employers can easily monitor employees ’ behavior (e.g., by direct observation
or through information systems) and give them ongoing direction and feedback. In such
situations, employees ’ awareness that they are being monitored may obviate paying for
performance.
When other motivators are sufficient or compensatory
Some people value other aspects of their jobs more than they value pay – factors such as
interesting work, autonomy, desirable location, benefits that meet their needs, or having a
boss they love working for. Such individuals will often accept lower pay in order to have
what is more important to them in their jobs.
When the company is unionized
Union contracts constrain an employer ’s pay policies, and thus under collective bargain-
ing agreements it may be impossible to pay for performance, especially at the individual
level. When incentives are included in a union contract, they are usually group incentives,
because group pay is viewed as encouraging cohesion rather than competition among
members.
CASE EXAMPLES
Paying for individual performance
True Value Company. Kelly and Hounsell (2007) provide an example of a highly success-
ful individual level pay - for- performance plan at the True Value Company (previously
TruServe Corporation), which since 2000 has offered a voluntary plan called “ simplifi ed
c12.indd 228 6/17/09 3:16:08 PM
228 CATHY C. DURHAM AND KATHRYN M. BARTOL
gainsharing ” (although not gainsharing in the traditional sense) at its regional distribution
centers. The incentive relies on a comparison of the actual performance of individual
warehouse workers against predetermined expectations based on historical averages and/
or engineered labor standards. Workers who perform above expectations are rewarded in
the following month by an increase in their hourly pay rate for the entire month. As long
as an employee ’s performance level is maintained (and there is no reduction in quality or
safety), the rate increase continues. The addition to pay is funded from the savings result-
ing from productivity gains, the employee ’s share of which is approximately one third and
the company ’s two thirds. Although there is no cap on savings to be shared, there is a
provision under which management and employees can agree to increase performance
expectation levels as processes become more refined (Kelley and Hounsell, 2007 ). Highly
productive employees appreciate that their individual contributions are recognized, that
rewards are immediate rather than deferred, and that the plan prevents poor performers
from sharing the rewards of top performers (O ’ Reilly, 2006 ). Reported benefits to True
Value have been a reduction in the number of employees needed to handle a consistent
volume of warehouse activity, decreased turnover, increased quality, and savings of several
millions of dollars annually (Kelly and Hounsell, 2007).
Countrywide Financial. Countrywide Financial, rescued from financial ruin through acqui-
sition by Bank of America in 2008 , provides an example of the perils of rewarding the
wrong things. Morgenson (2007) describes how Countrywide “ effectively ” used individual
incentives to promote the strategic (albeit short - sighted, ethically problematic, and ulti-
mately disastrous) goals of management during the recent mortgage lending boom.
Because subprime loans were so lucrative, Countrywide ’s commission structure reward-
ed sales representatives for making extremely risky loans that imposed heavy burdens
on borrowers. Incentives included: paying proportionately larger commissions for sub-
prime loans (0.50%) than for loans of higher quality (0.20%), which led brokers and sales
represent atives to move borrowers possessing good credit (and thus qualified for prime
loans) into the subprime category; adding an extra 1% of the loan’s value to the sales
commission when a three - year prepayment penalty was added, which encouraged locking
borrowers into high - cost loans after the initial “ teaser ” interest rate was reset; and offering
an additional 0.25% commission when the borrower added a home equity line of credit,
which promoted more borrowing by cash - strapped mortgagees. Its commission plan sup-
ported Countrywide ’s position as one of the most aggressive home lenders in the USA
and contributed to its role in triggering the global economic crisis of 2008.
Paying for team performance
Children’s Hospital of Boston. The accounts receivables (AR) department of Children’s Hospital
in Boston developed a team - based incentive program that led to a greatly reduced billing
cycle and aided cash flow for the hospital (Cadrain, 2003 ). The department had installed
a new billing system that was not working as intended, causing problems for employees
and leading to low morale in the department. The time to receive payments after bills
were sent out was stretching beyond 100 days and hospital officials were becoming con-
cerned about cash flow. To help improve employee morale and shorten the billing cycle,
hospital executives set up an incentive plan aimed at establishing a line of sight that
c12.indd 229 6/17/09 3:16:08 PM
229 PAY FOR PERFORMANCE
allowed employees to focus on the connections between number of days a bill spends in
AR and the quarterly cash flow of the hospital. Team members were provided with three
possible goals stated in terms of number of days an unpaid bill remained in AR: thresh-
old, target, and optimal. Each goal had a dollar amount attached to it with a provision
for a quarterly payment of $ 500, $ 1000, or $ 1500, respectively. Within 30 days of the
end of each quarter, each team member would receive a part of the payment prorated to
reflect the number of scheduled hours the team member worked, and a progress celebra-
tion was held. Once the team members understood the connection between their work
and the cash flow at the hospital as well as how their efforts could increase their personal
cash flow, they began working closely as a team to follow up with patients, insurers, or the
medical records people. By the end of the plan’s fi rst fiscal year, employees had succeeded
in reducing the average number of days a bill was in AR from 100 to 75.8. Shortly after,
they reached the middle 60s. The plan had an added bonus for the hospital because turn-
over in the AR department plummeted.
Hewlett - Packard. Beer and Cannon ( 2004 ) provide an example of team - based incentives
having unforeseen negative consequences. With the intention of supporting a move to self -
managed teams, managers at the San Diego site of Hewlett - Packard (HP) introduced a
team pay - for- performance system. The purposes were to motivate teams to achieve spe-
cifi c goals related to improvement, production, and quality. There were three levels of team
performance pay. Ninety percent of teams were expected to reach a Level 1 payout, with
50% at Level 2, and 10 – 15% at Level 3. For Level 3, members of the work team were
given between $ 150 and $ 200 extra at the end of the following month. There was also
a skill - based pay component, which allowed employees to achieve a higher base pay for
increasing skill levels as certified by “ subject matter experts; ” this was instead of receiving
merit raise increases. The program went well for the fi rst six months as most teams reached
Levels 2 and 3. However, the plan paid out more than expected and managers sought to
raise the performance standards, much to the chagrin of the employees. It also became
apparent that some factors, such as delays in shipments of parts or mechanical breakdowns,
could interfere with teams meeting goals, but were beyond their control. Another unex-
pected outcome was that high performing teams did not want to allow anyone who might
lower their performance to join the team, causing some teams to be composed of mainly
low performers. Mobility between teams, which could help learning transfer, also became
very limited. Finally, a majority of the employees did not like the additional pressure of
taking tests for the skill - based pay. After about a year, one of the largest divisions at the
site dropped the pay plan because managers grew weary of having to continually rework
the pay plan, and because employee surveys indicated that employees preferred to change
back to the standard pay system at HP. When the change back to the standard system was
announced, the employees staged a party to convey their gratitude. The rest of the site
eventually dropped the system when a major manufacturing reorganization was instituted.
Paying for organizational performance
Handelsbanken. Swedish - based Handelsbanken provides an example of profit sharing used
effectively to reward performance and instill loyalty among employees (Hope and Fraser,
2003 ). The bank ’s stated goal has long been to consistently realize higher profi tability than
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230 CATHY C. DURHAM AND KATHRYN M. BARTOL
comparable banks, and in 1973 then - CEO Jan Wallander established Octogonen, a foun-
dation through which Handelsbanken shares with employees the “ extra profits ” made
possible through their efforts. Employees are rewarded when company profits exceed the
average profits of comparable banks, and every year but one since 1973 the board has
allocated a portion of profits to Octogonen. Each full - time employee in the bank ’s home
markets receives an equal part of that year ’s allocated amount, regardless of position or
salary. (As noted in Chapter 33 , Sweden is an egalitarian culture, where equal allotments,
regardless of rank, are likely to be more acceptable than in individualistic countries such
as the USA, where formula - based allocations (e.g., a fixed percentage of salary) are more
common.) Distributions are deferred until retirement at age 60. Since Octogonen’s begin-
ning, Handelsbanken has performed well, and the profit sharing system has paid out
significant amounts of money. The plan, in conjunction with other employee - friendly
human resource management practices, is thought to be an incentive for staff to remain
with the company (Hammarströ m, 2007 ; Handelsbanken, 2007 ). In recent surveys, 82%
of Handelsbanken staff reported believing they could make a valuable contribution to the
bank ’s success (Times Online, 2007 ), and 86% reported that they would not leave, even if
they had another job offer (Times Online, 2008 ).
American Federation of Government Employees. Miller and Schuster ( 1995 ) describe the failure
of a gainsharing plan at a federally owned and operated industrial complex whose main
mission was the maintenance, repair, and rebuilding of military equipment. The com-
plex employed 4800 civilian workers, including several levels of management who ulti-
mately reported to military offices. A local of the American Federation of Government
Employees represented almost 60% of the hourly personnel. The gainsharing plan was
developed in response to an order from an off - site military commander who wished to
increase hourly productivity. The plan was designed by senior managers with no input
from line personnel, union leadership, or gainsharing consultants. A total of 460 employ-
ees were involved in the gainsharing plan, which was initiated as a 15 - month pilot
program. The plan base and payout levels differed for various units and, although com-
puted monthly, were distributed quarterly. The formula design apparently was fl awed,
and quickly caused feelings of inequity and dissatisfaction across units. The top depart-
ments in terms of monetary gain and payout earned did not register actual productiv-
ity gains, while several departments that did show productivity gains actually received
lower payouts. Middle managers particularly were frustrated by their lack of input into
the plan design. Both managers and production employees viewed the fact that the plan
was labeled a pilot program as evidence that there was actually little commitment to it
by upper management. Consensus also developed among participants that the quarterly
period for payout was too long. Ultimately, few if any gains in productivity materialized
and the plan was eventually discontinued, but not before it seriously damaged an effec-
tively functioning quality program that it partially overlapped.
Global pay
Cisco Systems. Organizations with international operations are presented with some unique
challenges when they attempt to pay for performance at the organizational (and thus glo-
bal) level. Nonetheless, multinational firms are increasingly instituting global pay in an
c12.indd 231 6/17/09 3:16:09 PM
231 PAY FOR PERFORMANCE
attempt to attract skilled workers and create organizational cultures in which employees
feel part of the same company regardless of their location. Cisco Systems, a maker of
Internet equipment, has 65,000 employees worldwide, with about one third operating out-
side of the USA (Cisco, 2008 ). The company sets base pay at the 65th percentile in every
labor market and offers variable pay that brings total remuneration to the 75th percentile
(Hansen, 2005 ). Cisco Systems ’ global strategy includes the use of stock options and a
stock purchase plan, but its commitment to doing so has meant that the company has
had to work hard to ensure that pay is understood, accepted, and deployed to the benefi t
rather than to the detriment of workers worldwide. Problems it has encountered include
(Gross and Winterup, 1999 ): regulations in China and Russia that limit the ability of citi-
zens to hold securities in foreign companies and differing tax regulations across countries
within Europe, including taxing stock options when they are received rather than when
they are exercised or severely taxing any profit if stock options are sold within the fi rst fi ve
years. Differences in per capita income have also caused some adjustments in some coun-
tries to avoid having individuals receive such huge capital gains that they would be able
to take early retirement in only a few years. These examples illustrate the importance of
staying abreast of labor markets and changing laws wherever a company has operations,
but Cisco Systems is convinced that doing so is worth the effort because it enables the fi rm
to recruit and retain superior employees worldwide. The company considers its employees
the company ’s best asset and, as a result, places heavy emphasis on a broad set of benefi ts
and a culture that focuses on “ nurturing and developing this talent to its full potential ”
(Cisco, 2004 ). Cisco frequently appears on various rankings of best places to work (Cisco,
2008 ; Gerdes, 2008 ).
CONCLUSION
Paying for performance works – when done right. It communicates what factors
are most important to the company ’s success and focuses employees ’ attention and
effort on those factors. It is fair, because it pays more to those who contribute more.
In turn, it attracts individuals who can perform at high levels and, by recognizing
and rewarding them for doing so, makes them want to remain.
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EXERCISES
Analyzing the pay system at your job
1. Think about your current job (or a job you ’ve held in the past). Circle the types of
pay you receive in this job:
Non - performance - based pay: Salary Hourly pay
Individual level: Piece - rate Sales commission Other variable pay Merit pay
Team level: Team - based pay
Organizational level: Gainsharing Profi t sharing Stock ownership (or options)
2. Use a scale from 0 to 4 to answer (a) – (c) below. (Circle your ratings.)
(a) How well does the pay plan contribute to your motivation to perform at a high level?
Performance: Not at all motivating 0 1 2 3 4 Extremely motivating
c12.indd 238 6/17/09 3:16:11 PM
238 CATHY C. DURHAM AND KATHRYN M. BARTOL
(b) How well does the pay plan contribute to your motivation to collaborate with or help
fellow employees accomplish their work goals?
Collaboration: Not at all motivating 0 1 2 3 4 Extremely motivating
(c) How well does the pay plan contribute to your motivation to remain with the organization?
Retention: Not at all motivating 0 1 2 3 4 Extremely motivating
3. What (if any) aspects of the plan are demotivating or demoralizing to you?
4. (a) What is one change your employer could make to the pay system that would
enhance your motivation to perform well and stay with the organization? (b) What
potential pitfalls or risks (to you, your fellow employees, or the organization) would be
associated with this proposed change?
Bank of America
In 2005, Bank of America unveiled a new profit sharing program, Rewarding Success,
which links cash bonuses for 85% of its employees – those whose cash compensation is less
than $ 100,000 and those not paid exclusively by commission or variable pay – to corpo-
rate performance goals. Aims of the program included: attracting and retaining employ-
ees, motivating performance, and creating a sense of shared destiny, especially after the
bank ’s merger with FleetBoston in 2004 (Davis, 2005 ; Ruiz, 2005). When the company
meets or exceeds annual business targets, all eligible employees receive equal bonuses,
which they can take as cash or defer in whole or part to their 401(k) accounts (Bank of
America, 2008). The minimum per- employee payout when the earnings trigger is reached
is $ 500, and employee bonuses rise with bank earnings to a potential maximum of $ 3000.
The bank originally considered offering equity as part of the new program, but a survey
of employees showed that they preferred cash. Also, because companies would have to
begin expensing stock options on their grant date beginning in 2006, the choice of cash
over stock options was considered wise (Davis, 2005 ).
Davis ( 2008 ) reports that in 2006, eligible employees received bonuses of $ 1175, and
in 2007 they received $ 1820. However, after lower- than - expected earnings in 2007 due
to deteriorating credit quality and capital market difficulties, Bank of America informed
employees that it would not pay bonuses under the program. Commented a company
spokeswoman: “ It ’s disappointing to all of us. ” Given the crisis in US fi nancial markets
in 2008, future bonus payments are uncertain at best. What is your assessment of the
Rewarding Success program, from both the bank ’s and the employees ’ perspectives? What
recommendations would you make to Bank of America?
c13.indd 239 6/17/09 6:54:45 PM
13
Provide Recognition for
Performance Improvement
FRED LUTHANS AND ALEXANDER D. STAJKOVIC
It is difficult to conceive of a society populated with people who are completely
unmoved by the respect, approval, and reproof of others . (Bandura, 1986 ,
p. 235)
The effect of positive reinforcement, contingently applied, on performance improvement
may be one of the most agreed upon principles in the field of organizational behavior, and
arguably psychology in general. In his pioneering work in organizational behavior, Vroom
( 1964 ) noted that “ without a doubt the law of effect or principle of reinforcement must
be included among the most substantiated findings of experimental psychology and is
at the same time among the most useful findings for an applied psychology concerned
with control of human behavior ” (p. 13). Years later, in his classic work in psychology on
social foundations of thought and action, Bandura ( 1986 ) concludes that “ human behav-
ior cannot be fully understood without considering the regulatory influence of response
consequences ” (p. 228). Recent work, synthesizing different subsets of this vast literature
over the years, has meta - analytically shown the positive effect that contingent reinforcers
have on performance outcomes (Stajkovic and Luthans, 1997 , 2003 ).
We use the term “ reinforcers ” rather than “ rewards ” throughout this chapter to recog-
nize that the more common term reward is used in the behavioral management literature
to refer to what managers think will have a positive impact, whereas a reinforcer is defi ned
as a consequence that, indeed, increases the frequency of the behavior that preceded it
(see Luthans and Kreitner, 1975 ; Luthans and Stajkovic, 1999 ). The three types of positive
reinforcers (treatment interventions) that have shown to increase the frequency of employee
behaviors, and that are most often used to improve performance in the behavioral manage-
ment literature/research, are money, feedback, and recognition. Money (Chapter 12 ) and
feedback (e.g. see Chapters 9 and 10 ) are given attention in other places in this volume.
As reflected in the title, the principle described in this chapter is that providing contingent
(if - then) recognition for desired behaviors leads to improved performance.
In this chapter, beside using the term reinforcer rather than reward, we also make a dis-
tinction between formal and informal (sometimes referred to in the literature as “ social ” , e.g.
see Luthans and Stajkovic, 1999 ; Stajkovic and Luthans, 2001 , 2003 ) recognition. Formal
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240 FRED LUTHANS AND ALEXANDER D. STAJKOVIC
recognition refers to reinforcing employee accomplishments through formal company
programs such as employee of the month or specific awards for attaining levels of per-
formance. These formal recognition programs, if their psychological, reinforcing purpose
is understood and taken seriously (e.g. by those who may be put in charge of administering
these programs but may not necessarily be familiar with reinforcement theory), are typi-
cally accompanied by some form of tokens of visual acknowledgment (e.g. plaques) and
are administered publicly (e.g. company banquet, some other formal ceremony). If these
formal recognition programs are promoted by the company, but are not enacted fairly or
consistently (e.g. played out differently for different employees, i.e. no plaques and/or cer-
emonies for you), they may be perceived as phony (or worse, discriminating) and not lead
to performance improvement. Although this chapter does not focus on such formal recog-
nition, we will provide some examples and guidelines to follow for successful programs.
This chapter is mostly concerned with social or informal recognition. We defi ne this
type of recognition as an individual and/or group (thus the use of the term social) provid-
ing contingently informal genuine acknowledgment, approval, and appreciation for work
well done to another individual and/or group. This informal recognition is provided typi-
cally on a one - on - one personal level (thus the use of the term informal), verbally, and/or
in writing/email. Besides social and informal, we also emphasize the qualifier “ genuine ” in
this definition because it does not include phony praise, “ attaboys ” (or girls), a smiley face,
or a pat on the back. This type of recognition is also given contingent upon exhibiting the
desired/relevant behavior(s) that has a favorable impact on desired performance outcomes.
In summary, though the term recognition as used in this chapter is social, genuine, and
contingently administered, we will mostly refer to it as informal recognition to differenti-
ate from formal recognition.
The broad appeal of informal recognition at work is that it applies to many (bot-
tom to top in the hierarchy), few ever get too much of it (satiation principle mostly fails
here), is readily available for use by everyone (i.e. anyone who can verbalize an appreciat-
ing sentence or two, and/or write such an email), and, to the potential disbelief of some
economists (who, albeit, have increasingly been discovering the relevance of psychology
to economics, e.g. Frey and Stutzer, 2002 , 2007 ), it works but does not involve giving out
money/monetary incentives. As noted by one employee:
For me, receiving praise and recognition kind of sets off a little explosion inside. It ’s
kind of like, “oh, that was good, but you know what? I can do better.” It helps give you
drive to want to continue achieving,. . . . (Wagner and Harter, 2006 , p. 54)
To demonstrate the power of such recognition on a personal note, perhaps ask yourself
this simple question: “Are you, or anyone else you know, suffering from too much genuine
recognition? ” We are not. For example, when Bob Hope, well into his eighties, was asked,
“ Why don’t you retire? ” he quickly answered, “ Because the darn fi sh don’ t applaud! ”
In addition to this common - sense appeal of providing informal recognition as a posi-
tive reinforcer to increase employee performance, there is also considerable theory and
research in the fi eld of organizational behavior supporting its effectiveness.
SOCIAL COGNITIVE THEORY ANALYSIS OF RECOGNITION
The use of recognition in behavioral management was initially based on reinforcement the-
ory, which assumes that the causal agents of employee behaviors are found in the functi onal
c13.indd 241 6/17/09 6:54:46 PM
241 PROVIDE RECOGNITION FOR PERFORMANCE IMPROVEMENT
relationship between the environmental consequences and the behavior they effect (Komaki,
1986 ; Luthans and Stajkovic, 1999 ; Stajkovic and Luthans, 1997 ). However, the explanatory
power of the reinforcement approach to human action has been questioned on the grounds
that it falls short of providing the needed conceptual process - oriented analysis and under-
standing of the nature and underlying operating psychological mechanisms of recognition
(i.e. how does it work) (Bandura, 1986 ; Locke, 1997 ; Stajkovic and Luthans, 1998 a, 1998 b,
2001 , 2003 ).
Social cognitive theory (Bandura, 1986 , 1999 ) has been offered as a more comprehensive
analysis and understanding of organizational behavior in general (Stajkovic and Luthans,
1998 b) and reinforcers such as recognition in particular than was provided by reinforcement
theory (Luthans and Kreitner, 1985 ; Stajkovic and Luthans, 2001 , 2003 ). Specifi cally, in our
social cognitive analysis of the nature of recognition we offered three dimensions: (1) out-
come utility; (2) informative content; and (3) psychological mechanisms through which it
affects behavior (Stajkovic and Luthans, 2001 , 2003 ). A conceptual process - oriented analy-
sis of recognition along these three factors, we would argue, leads to a both deeper and
more comprehensive understanding of its nature and underlying processes than is allowed
by reinforcement theory ’s environmental determinism approach alone.
Outcome utility of social recognition
Bandura ( 1986 ) argues that recognition derives its outcome utility from its predictive value
and not just from the social reactions themselves, as reinforcement theory would suggest.
In other words, recognition ( personal acknowledgment, approval, appreciation) precedes
and could be perceived to lead to desired employee outcomes such as a promotion, raise,
or an assignment to a desired project. Thus, in addition to the positive social reaction from
the source of the recognition, it may also indicate to an employee a potentially upcoming
desired outcome utility (and incentive value).
In terms of the magnitude of its effectiveness in affecting employee behavior, rec-
ognition given by those who have the power and resources to make desired outcomes a
reality for the recipient (e.g. managers, supervisors) will arguably have a stronger effect
than the recognition provided by those who may not have such power or resources (e.g.
a staff member or an outside vendor). However, recognition provided by those who may
not have financial resources and/or promotion power at their disposal, but have consid-
erable respect/credibility (e.g. an admired peer, mentor), may also be powerful in affect-
ing employee behavior for it may lead to desirable outcomes such as being included in
the “ in - group. ” In sum, the social cognitive approach predicts that employees will pursue
behaviors that receive informal recognition, especially from those who can provide desired
material and/or social outcomes, for it suggests that they may be on the “ right track. ”
Informative content of informal recognition
Informal recognition, as we define it, has relatively less informative content than, for
instance, specific performance feedback (e.g. you processed 10 applications and were sup-
posed to process 15). Yet, because recognition is also a form of feedback that has been
evaluated and the effective delivery of recognition should include a reasonable amount
of specifics, there may be a different informative content value in what is expressed. It is
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242 FRED LUTHANS AND ALEXANDER D. STAJKOVIC
important to note that the “ scale ” for the informative value of recognition focuses on the
content value (i.e. the “ quality ” ) of what was said (e.g. the reason for the recognition) and
not necessarily on the “ quantity ” of praise that was dispensed.
Showing employees how much their work is appreciated through informal recognition is
not achieved by using non - contingent standardized phrases (e.g. good job!), but by convey-
ing genuine personal appreciation for exhibiting desired behavior(s) and work well done.
This is because indiscriminate approval that does not eventually result in tangible bene-
fits becomes an “ empty reward, ” thus lacking the potential to control or effectively man-
age employee behavior. It is the difference between indiscriminate approval and genuine
appreciation (signaling future desired behaviors) that portrays the informative continuum
of informal recognition. For example, instead of a generic phrase such as “ good job, ” the
recognition giver may provide specific information such as “ I know that you stayed late
last night to finish the presentation I gave you at the last minute. It was a great success
in the meeting this morning. ” This reasonably detailed form of informal recognition not
only conveys acknowledgment and appreciation, but also information for motivating sub-
sequent desired behavior.
The regulatory mechanism: forethought
The third dimension of a social cognitive explanation of recognition focuses on the reg-
ulatory mechanism through which social recognition impacts human action. We have
argued that the basic human capability of forethought (see Bandura, 1986 ) is the means
to cognitively operationalize informal recognition as a reinforcer:
Based on the recognition received and, thus, the perceived prediction of desired con-
sequences to come, people will self - regulate their future behaviors by forethought. By
using forethought, employees may plan courses of action for the near future, anticipate
the likely consequences of their future actions, and set performance goals for them-
selves. Thus, people first anticipate certain outcomes based on recognition received,
and then through forethought, they initiate and guide their actions in an anticipatory
fashion. (Stajkovic and Luthans, 2001 , p. 164)
Thus, forethought becomes a regulatory mechanism that permits perceived future desired
outcomes based on the recognition to be transferred into current employee behaviors that
lead to performance improvement. Overall, the above discussion of the three dimensions
represents the nature and underlying conceptual mechanisms of recognition from the
social cognitive perspective.
EMPIRICAL RESEARCH ON THE USE OF INFORMAL
RECOGNITION IN BEHAVIORAL MANAGEMENT
In behavioral management research (Luthans and Kreitner, 1975 , 1985 ; Stajkovic and
Luthans, 1997 , 2001 , 2003 ), recognition plays a prominent role, i.e. there is considerable
empirical evidence that recognition contingently provided to desired employee behaviors
leads to performance improvement (i.e. recognition increases the measured frequency of
desired behaviors). Examples from both manufacturing and service organizations can help
illustrate this research.
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243 PROVIDE RECOGNITION FOR PERFORMANCE IMPROVEMENT
In a manufacturing setting, a desired behavior identified to impact employee perform-
ance may be the productive use of idle time during preventive maintenance. The con-
tingent recognition would be delivered by a supervisor perhaps saying to the worker in
question, “ I noticed that you helped out Joe while your equipment was being serviced by
the maintenance crew. ” In this example, it is important to note that the recognition did
not include a “ gushy ” “thanks a lot ” or some phony praise for what this worker was doing.
Instead, this employee simply “ knew that his supervisor knew ” that he had gone out of
his way to help out a fellow worker. Because of the received positive reinforcer through
contingent recognition from the supervisor, this employee would likely repeat ( based on
Thorndike ’s law of effect) the reinforced desired behavior in the future. In other words,
instead of receiving no positive reinforcement for this work behavior (that would lead
to extinction of such behavior in the future), the supervisor providing contingent recog-
nition will likely repeat the worker ’s behavior, which in turn contributes to performance
improvement. Multiply that by other employees and performance improves at no, at least
direct, costs to the organization.
In a service setting such as a bank, an identified functional behavior targeted for
improvement, say of tellers, may be providing customers information about various prod-
ucts the bank offers. As in the manufacturing example above, upon observing this behavior,
the supervisor would provide contingent recognition by saying something like, “ I over-
heard your explanation to that last customer about how to obtain, use, and the advantages
of having a credit card. I think we may be adding her to our business. ” The positive rein-
forcement through the recognition provided, again, had the aim of increasing the desired
employee behavior, which should subsequently help increase performance (of those rein-
forced employees).
A large number of studies over the years have verified that recognition is indeed a power-
ful reinforcer of employee behaviors leading to performance improvement. Meta - analysis
of 19 reinforcement theory studies revealed (when all used Luthans and Kreitner ’s 1975 ,
1985 five step Organizational Behavior Modification or OB Mod. application model/
approach to behavioral management) an average effect of recognition on performance
improvement of 15% (Stajkovic and Luthans, 1997 ). This was followed by a more compre-
hensive meta - analysis that examined 72 reinforcement theory studies in organizational set-
tings that found (irrespective of a specifi c application model) an average effect size of social
recognition on performance of 17% (Stajkovic and Luthans, 2003 ). Finally, in a recent fi eld
experiment, informal recognition increased performance of workers in the manufacturing
setting by 24% (Stajkovic and Luthans, 2001 ).
Informal recognition has also been shown to have a strong performance impact at the
business - unit level of analysis and in an international application. In a study of 21 stores in
a fast - food franchise corporation, informal recognition as part of a non - financial (i.e. along
with performance feedback) intervention in behavioral management signifi cantly increased
both unit profit performance and customer service measures and decreased turnover
(Peterson and Luthans, 2006 ). Further analysis also indicated that these gains from the
non - financial incentives were sustained over time and, when compared to fi nancial incen-
tives, had an equally significant impact except for employee turnover. Internationally, the
application of social recognition in a modern Korean broadband internet service fi rm
was found to have a significant impact on both the quality and quantity of performance
(Luthans, Rhee, Luthans, and Avey, in press).
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244 FRED LUTHANS AND ALEXANDER D. STAJKOVIC
In addition to this research evidence, the practitioner- oriented, professional literature
also contains some empirical support for the impact of informal recognition. For example,
a nationwide survey of US workers found that about 70% report that non - monetary
forms of recognition provide the best motivation ( HR Focus, 1999 ). This same survey found
that employees favor recognition from managers and supervisors by a margin of almost
2:1 over recognition from co - workers or other sources. Another survey conducted by the
Council of Communication Management found that recognition for a job well done is
the top motivator of employee performance. In the same survey, a third of the managers
themselves report that they would rather work in an organization where they could receive
more/better recognition (Nelson, 1994).
The Gallup Organization has also conducted an exploratory analysis on its database of
28 studies involving 105,680 employee responses to a large survey from a wide variety
of fi rms. The survey item dealing with recognition ( “ In the last seven days, I have received
recognition or praise for doing good work” ) was significantly and positively related to
2528 business units ’ outcome measures of customer satisfaction/loyalty, profi tability, and
productivity, but not turnover (Harter and Creglow, 1999 ). However, some other surveys
(Nelson, 1996) indicate that recognition, along with the other desirable outcomes, may be
a determinant of retention.
MODERATORS OF INFORMAL RECOGNITION
Based on reinforcement theory (which preceded social cognitive theory), it was generally
implied that recognition had no moderators of its positive impact on performance. Unlike
money and feedback, recognition, from a reinforcement theory perspective, was portrayed
as always being a positive reinforcer (it always increases the preceding behavior). Even
though, as the opening comments of this chapter indicate, recognition is still most often
thought of as applying to everyone and no one (really) gets tired of it, the social cog-
nitive conceptual analysis, as outlined above, and the recent meta - analyses of the litera-
ture pertaining to the effectiveness of different reinforcement interventions (Stajkovic and
Luthans, 1997 , 2003 ) seem to indicate that there may be moderators of the relationship
between recognition and performance.
Type of organization
One moderator tested in our 1997 meta - analysis, which examined an impact of reinforce-
ment interventions, was the type of organization. This analysis indicated that the average
effect sizes for all the different interventions varied significantly between manufacturing
and service applications (Stajkovic and Luthans, 1997 ); they all, including informal recog-
nition, had a greater impact on performance in manufacturing than in the service organiz-
ations. A possible explanation of these findings may be that it is more difficult to identify
critical performance - related behaviors to offer recognition in service than in manufactur-
ing organizations, rather than to assume the lesser effect of recognition in service organiz-
ations. For example, in routine manufacturing even certain simple hand movements or
procedures may impact performance, but in a service environment customer interactions
typically may be highly individualized and unique.
c13.indd 245 6/17/09 6:54:47 PM
245 PROVIDE RECOGNITION FOR PERFORMANCE IMPROVEMENT
Effects with money and feedback
In our 2003 meta - analysis, we found that not only recognition had a significant effect on
performance (17% improvement), but it also produced a synergetic effect with money
and feedback. The combined intervention of all three reinforcers produced the strong-
est effects on performance (45% improvement), with the theory being that money fosters
effort, feedback clarifies the task, and social recognition is a desired outcome and pre-
dicts future outcomes. Another interesting aspect of these findings was that when social
recognition and money alone were the two interventions examined, they did not seem to
match well and produced the weakest impact, weaker than either one alone (we called this
the “ mismatch ” cost). However, when feedback was added to the mix (apparently offering
clarity to the recognition – money relationship), it fostered the strongest effect.
THE ROLE OF RECOGNITION IN BUILDING SELF-EFFICACY
Self - efficacy is a key variable in social cognitive theory (Bandura, 1997 ; Stajkovic and
Luthans, 1998 a, 1998 b – see Chapter 10 ), and recognition may be an input into its devel-
opment. Self - efficacy is defined as a belief in one ’s capabilities to organize cognitive and
behavioral faculties and execute the courses of action required to produce desired out-
comes in a specific context and on a specific task (Bandura, 1997 ; Stajkovic and Luthans,
1998 a, 1998 b). In performing a specific task, an employee ’ s self - effi cacy determines
whether the necessary behavior will be initiated, how much effort will be expended and
sustained, and how much persistence and resilience there will be in the face of obstacles,
problems, or even failure (Bandura, 1997 , 1999 ). Self - efficacy has been shown to be
strongly related to work- related performance (a .38 weighted average correlation in our
meta - analysis of 114 studies; Stajkovic and Luthans, 1998 a).
Unlike personality traits, self - efficacy is generally recognized to be a state variable that
can be developed and trained (Bandura, 1997 ; Luthans, Avey, and Patera, 2008 ; Stajkovic
and Luthans, 1998 a, 1998 b). The key inputs into the development of self - efficacy are mas-
tery experiences, modeling/vicarious learning, social persuasion, and physiological/psycho-
logical arousal (Bandura, 1997 ; Stajkovic and Luthans, 1998 b). We suggest that recognition
may have direct or at least indirect implications for each of these developmental dimensions
of self - effi cacy. For example: (1) recognition may be perceived as confi rmation of success; (2)
seeing others being recognized would be vicariously reinforcing; (3) recognition framed as
social persuasion may enhance the receivers ’ beliefs as to what they can do with what they
already have (without requiring new knowledge/skills); and (4) recognition would likely pro-
vide encouragement for employees to stay on the course of action and persist when meeting
performance obstacles and problems. In other words, social recognition may help build self -
efficacy, and those with higher self - efficacy perform better (Bandura, 1997 ).
FORMAL RECOGNITION PROGRAMS DRAWN FROM
P
RACTICAL EXPERIENCE
So far, the discussion has focused on the conceptual and empirical properties of informal
recognition and its relationship to performance. As the introductory defi nitions indicated,
c13.indd 246 6/17/09 6:54:47 PM
246 FRED LUTHANS AND ALEXANDER D. STAJKOVIC
another way to consider recognition is from the perspective of more formal programs
used to recognize employees in real - world organizations. In that vein, largely based on
experience and anecdotal evidence, Nelson (1994, 2005) gives practicing managers 1001
Ways to Reward Employees. This best - selling handbook, according to the book jacket, is “A
chock - full guide to rewards of every conceivable type of situation. ” Nelson (1994) pro-
vides the following guidelines for effective formal recognition programs:
◆
WHO (outstanding individual employees or teams/groups in terms of productivity,
quality, suggestions, customer service, sales, attendance or safety);
◆
WHAT (time off, vacations, field trips, special events, educational classes, benefi ts,
gift certifi cates, cash prizes, merchandise, trophies, pins or plaques);
◆
HOW (nomination procedures, representative committees, point systems, or con-
tests); and
◆
WHERE (newsletters, regularly scheduled meetings or specifi c celebrations/banquets).
Nelson also provides specific company examples of recognition programs, such as at
Home Depot, where each store picks an employee of the month (the criterion being
someone who has given time to an area of the store that technically lies outside his or her
responsibility). The recipient is given $ 100, a merit badge (five badges earn an extra $ 50),
a special pin to wear on his or her apron, and the honoree ’s name engraved on a plaque
displayed at the front of the store.
Our discussion of the theory and research points out why recognition should be used,
and this practical handbook points out to managers that they no longer have the excuse
of not using recognition because they do not know the pragmatics of who, what, how, or
where. This book supports the use of both the informal/interpersonal and more formal
recognition programs, offers a few featured quotes (e.g. Mary Kay Ash: “ There are two
things people want more than sex and money . . . recognition and praise ” ), and outlines
guidelines for administering recognition (e.g. match the reward to the person, match the
reward to the achievement, and be timely and specifi c).
IMPLEMENTATION GUIDELINES FROM THEORY AND RESEARCH
The principle of this chapter is drawn from both reinforcement and social cognitive theories,
and is supported by the findings from the meta - analyses of research studies over the years
(Stajkovic and Luthans, 1997 , 2003 ). It says that managers providing recognition contingent
upon individual employees ’ desired behaviors leads to performance improvement. Although
the recognition that is inherent in formal reward systems and programs described above are
included in the definitional domain of the principle, we suggest that informal recognition
based on personal attention and appreciation has a relatively stronger impact on perform-
ance than the formal recognition programs. This is because the one - on - one contingently
used recognition (of the form stated earlier “ the employee knows that his or her supervisor/
manager knows ” ) tends to be more valued and have more universal appeal than do formal
recognition programs. Daniels and Daniels ( 2007 ) have recently noted that “ Good personal
relationships are the source of the best reinforcement such as positive comments . . . cost
little or nothing and when done appropriately cannot be given too often ” (p. 109).
c13.indd 247 6/17/09 6:54:47 PM
247 PROVIDE RECOGNITION FOR PERFORMANCE IMPROVEMENT
The reason formal recognition programs may not have the desired effects, especially
over time, is because they may easily turn into being phony, not valued by the recipient,
or go against the cultural norms. For example, in employee of the month programs, the
first few recipients may be deserving that everyone agrees with, but over time selections
may become more and more subjective and controversial, often resulting in selecting
less - qualified individuals (and potentially not agreed upon by their peers). At this point
company politics too often come into play and those who deserve but do not receive the
recognition feel betrayed. In this case, the program would most likely produce negative
effects (i.e. “ rewarding A while hoping for B ” ) and the recognition is not given contingent
upon exhibiting the desired behaviors. A formal recognition award such as the “ Golden
Banana ” at Hewlett - Packard can initially be a reinforcer, but over time may become
an empty reward (e.g. award or benefit tends to be valuable to the reward giver but not
necessarily to the reward recipient) and be perceived even in a negative light. From a col-
lectivistic cultural values standpoint, although many may like to be recognized for their
efforts and achievements, not everyone likes to be singled out in a public way, which is
usually the case with formal recognition programs.
The implementation guideline to get around problems associated with formal recog-
nition would follow from the reinforcement and social cognitive theoretical frameworks.
One suggestion would be to use formal recognition awards contingent upon objectively
measured performance. The key is that everyone involved must perceive that the formal,
public recognition is deserved. For example, formal awards based on sales performance
(the famous pink Cadillac at Mary Kay Cosmetics or a plaque given for selling fi ve million
at a real - estate firm’s banquet) would be appropriate and effective, but many outstanding
performer of the month awards (or administrator- nominated, and not voted upon by stu-
dents, teaching awards in academic institutions for that matter) may not be. The latter
may be subjectively determined. To be effective as a reinforcer for performance improve-
ment, they must be as objective as possible and be perceived by the recipient, and also by
others, as being fairly and objectively selected (i.e. procedural and distributive justice – see
Chapter 14 ). This guideline is compatible with both reinforcement theory applications
(e.g. objective, contingent consequences) and the principle of justice.
Although the theory - based implementation guideline would be to depend on and
provide relatively more informal recognition than formal recognition (as defined at the
beginning of the chapter), it does not rule out the need for some formal recognition.
Contingently given, informal, private recognition dominates the reinforcement - based
behavioral management, and has been clearly demonstrated by empirical research to
increase performance (Stajkovic and Luthans, 1997 , 2001 , 2003 ). As the more compre-
hensive social cognitive theory suggests, it is important to ground the informal, private
recognition in the formal, public (symbolic) recognition domain. Also, the more objective
and fair this formal recognition, the better. This example provided by a practicing consult-
ant is indicative of such a symbolic application guideline:
If people receive social reinforcement on the four- to - one ratio (a minimum of four
socials to one tangible) and receive reinforcers for behaviors, not only results, they will
view the tangible as a symbolic representation of appreciation. Then tangibles become
items which serve as reminders of the social reinforcement they have already received.
A tangible reinforcer carries the most impact when it symbolized the recognized
behavior or result. (Allen, 1994 , p. 25)
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248 FRED LUTHANS AND ALEXANDER D. STAJKOVIC
Again, reinforcement theory would say that recognition is reinforcing per se, but the social
cognitive theory would suggest that the formal recognition is at least needed once in a while
to provide outome utility (e.g. a raise, promotion, or special assignment), informative content
(point to what the organization values), and regulatory mechanism (and symbolic value of
recognized behavior, and forethought on developing strategies to obtain desired outcomes).
CASE EXAMPLES
Nelson ’s (1994) best selling book contains 1001 real - world examples, and a more recent
version adds hundreds more (Nelson, 2005), many of which are short cases of mostly
formal recognition programs in well - known firms such as Kodak, Honeywell, American
Express, IBM, Procter and Gamble (but also in smaller organizations). Most of these are
richly described with specific individuals and details regarding the form of recognition used
to improve performance. However, only a very few of these provide any, even descriptive,
evidence on the effectiveness of these formal recognition programs, and none uses research
designs or statistical analysis to test hypotheses or draw causal conclusions. Thus, these
examples are useful anecdotes, but we would argue that a more evidence - based analysis of
recognition is needed for sustainable impact and justification. Thus, the examples described
below are from our own empirical studies in manufacturing and service organizations using
informal recognition. Most of these allow causal conclusions to be drawn on the effective-
ness of informal recognition in improving performance. Largely summarized/drawn from
Luthans ’ organizational behavior textbook and co - authored articles, these studies generally
followed the five step OB Mod. model (identify, measure, functionally analyze, intervene
with recognition, sometimes in combination with feedback, and evaluate) (Luthans and
Kreitner, 1975 , 1985 ; Luthans and Stajkovic, 1999 ; Stajkovic and Luthans, 1997 ).
Medium - size light manufacturing firm
This field study had two matched groups (experimental and control) of nine production
supervisors each. The experimental group received training in behavioral management
by the researchers. The intervention involved supervisors ’ providing recognition contin-
gent upon their workers exhibiting the identified performance - related behaviors. On the
charts kept by each trainee, it was clearly shown that in all cases they were able to change
critical performance - related behaviors. Examples of behavioral changes accomplished by
the supervisors included decreasing the number of complaints, reducing the group scrap
rate, decreasing the number of overlooked defective pieces, and reducing the assembly
reject rate. The most important result of the study, however, was the signifi cant impact
that the recognition intervention had on the performance of the supervisors ’ departments.
It was found that the experimental group ’s departments (those in which the supervisors
use the recognition intervention in their behavioral management) signifi cantly outper-
formed the control group ’s departments.
Large - size manufacturing plant (supplier to the telecommunications industry)
This study started off as a replication of the study summarized above, but was disrupted
by labor relations conflict and a strike at the national level preventing completion of the
c13.indd 249 6/17/09 6:54:48 PM
249 PROVIDE RECOGNITION FOR PERFORMANCE IMPROVEMENT
full analysis. However, the following summarizes some typical cases of behavioral change
that occurred in the production unit of this manufacturing firm through contingent
recognition:
1. Use of idle time. One supervisor had a worker with a lot of idle time. Instead of using
this time productively by helping others, the worker would pretend to look busy and
stretch out the day. The supervisor intervened by giving the worker recognition con-
tingent upon the worker ’s helping out at other jobs during idle time. This approach
notably increased the worker ’s productive use of idle time.
2. Low performer. A production worker in one of the supervisor ’s departments was pro-
ducing below standard (80.3% of standard over a six - month period). The low per-
formance was not deemed to be an ability, technical, training, or standards problem.
After analyzing the situation, the supervisor used recognition to increase the types
of behaviors that would lead to higher output. This intervention resulted in a 93%
standard performance level, with no decrease in quality.
3. Group quality. One supervisor had a problem with the quality of work in his department.
Objective measurement verified this problem. After analyzing the situation, the super-
visor used recognition on the group as a whole. Shortly after its use, the group attained
the quality standard for the first time in three years.
4. Group attendance. Another supervisor felt that he had an attendance problem in his
department. Objective measurement revealed 92% attendance, which was not as big
a problem as he had thought. However, he established the goal of 100%. After he used
contingent recognition on the group, 100% attendance was attained rapidly. An inter-
esting anecdote told by this supervisor was that one of his workers was riding to work
from a small town in a car pool early one morning when they hit a deer. The car was
disabled by the accident. Co - workers who worked in other departments in the plant
and were also riding in the car pool called relatives and went back home for the day.
This worker, however, did not want to ruin the 100% attendance record, so she hitch-
hiked to work by herself and made it on time.
5. Problem with another department. One supervisor felt that the performance of his depart-
ment was adversely affected by the unrecoverable time of truck - lift operators who
were not directly under his supervision. After obtaining objective measurement and
conducting an analysis of the situation, the supervisor decided to use recognition with
the informal group leader and the supervisor of the truck - lift operators. The interven-
tion substantially reduced the unrecoverable time affecting the operational perform-
ance of his department.
These five examples are only representative of the types of behavior that the supervisors
using a recognition intervention were able to change. Taken together, such individual
behavioral projects contributed to improving the overall performance of these super visors ’
departments.
Largest meat - packing plant in the world
This study was conducted in the labor- intensive meat - packing industry. In the largest
packing plant in the world (in terms of employees and output), 135 production supervisors
were trained by the researchers in behavioral management and used social recognition
c13.indd 250 6/17/09 6:54:48 PM
250 FRED LUTHANS AND ALEXANDER D. STAJKOVIC
as the intervention. The recognition was contingently applied by the trained supervisors
to identify employee - desired behaviors such as performing a particular operation more
effi ciently, and delivering a certain piece of material in a more timely manner.
This behavioral management with recognition as the intervention had a positive impact
on all product areas in which it was applied. There was wide variation, but utility analysis
indicated that although there was only a 2% gain in product #2, this still translated to an
annual value of nearly $ 900,000 in this company, and the 1.4% gain in product #6 equated
to an annual value of about $ 750,000. The projected values of the productivity gains in
other product areas were estimated for this company as follows: product #1 $ 259,000;
product #3 $ 510,000; product #4 $ 371,000; and product #5 an impressive overall $ 2.276
million gain.
Large comprehensive hospital
This study was conducted in the fast - growing, but much less structured than manufactur-
ing, health care industry. As in the manufacturing application, 11 supervisors from medical
service, business, and operations units in a large hospital were trained by the research-
ers in behavioral management and used contingent recognition as the intervention. The
results showed that there was improvement in all the performance measures. For example,
over the two months of the intervention, emergency room registration errors (per day)
decreased by 76%; medical records errors (per person per audit) decreased by 97%; aver-
age output of transcriptionists increased by 2%; EKG procedures accomplished increased
by 11%; drug output (doses) in pharmacy increased by 21% and waste decreased by 25%;
retake rates (percent) in radiology decreased by 11% and in the admitting office time to
admit decreased by 69% and average cost decreased by 22%. In other words, the recog-
nition intervention was effective in modifying a broad range of performance - related
behaviors in a hospital setting. This approach seemed to affect both the quality and the
quantity performance measures. Moreover, the data indicate that each of the trained
supervisors was successful in applying contingent recognition, despite the whole range of
complex situations encountered on a daily basis in this complex industry.
The teller line in a bank
Unlike the manufacturing and even the hospital applications, which had specifi c perform-
ance outcome measures, this service application measured teller – customer quality service
interactions as rated by customers. The experimental group in this study was the teller
line at a branch of a medium - sized bank and the control group were the tellers at another
branch of the same bank. The researchers gathered pre - intervention, intervention, and
post - intervention data unobtrusively (around the corner from the teller line) from custom-
ers right after a service interaction between the tellers and customers in both the experi-
mental and control groups. The customers rated the service they received according to six
key dimensions that were identified from the service literature and this bank ’ s management
as being most important: greeting, eye contact, speed of service, degree of help offered,
personal recognition of the customer, and appreciation for the customers ’ business. An
overall perception of the quality service for the transaction was also obtained. These
ratings were gathered randomly over a 10 - day period in each phase of the experiment.
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251 PROVIDE RECOGNITION FOR PERFORMANCE IMPROVEMENT
Since the data were collected out of sight of the tellers, they were unaware this was hap-
pening (follow - up checks indicated this was the case).
The intervention consisted of identifying, fully describing in behavioral terms, and
emp hasizing the importance to customer service of the six dimensions to the tellers
and their supervisors in the experimental group. In particular, the supervisors were
instructed by the researchers to provide contingent recognition when observing these six
dimensions being exhibited by their tellers. This recognition was given throughout the inter-
vention period, but then the recognition was withdrawn in the post - intervention (reversal)
period. The researchers were frequently on site to assist the supervisors during both phases
of the experi ment, and manipulation checks verified the procedures were in effect.
The results indicated that four of the six dimensions (greeting, speed of service, person-
al recognition, and appreciation) were significantly higher in the experimental group. The
overall measure of quality service was not different between the control and experimental
groups during pre - intervention, significantly higher for the experimental group during
intervention, and then not different during the post - intervention period when the recog-
nition was deliberately withheld by the supervisors. In other words, like the manufacturing
applications, a contingent recognition intervention seemed to have had a causal positive
impact on customer service performance in this bank.
Largest credit card processing operation in the world
In this field study, Stajkovic and Luthans ( 2001 ) examined the relative differences in effects
among monetary incentives, recognition, and performance feedback on a routine, low - task
complexity job in the largest credit card processing operation in the world (58 million accounts
outsourced from banks, retailers, and e - commerce firms). In terms of application procedures,
the trained supervisors administered recognition contingent upon workers performing the spe-
cifi c behaviors identifi ed in step 1 of the OB Mod. model. As we have emphasized throughout
the chapter, supervisors were explicitly instructed that administering recognition and atten-
tion was not to be “ sugary ” praise or a “ pat on the back. ” Rather, the intention was to let the
employee know that their supervisor “ knew ” they were doing the behaviors previously com-
municated to be important to performance. For example, the trained supervisors said things
such as, “ When I was walking through your area on my way to the front office this morn-
ing, I saw you making a sequence check, that ’s what we’re really concentrating on. ” Follow - up
checks indicated this recognition intervention was indeed taking place.
The results of this study indicated: (a) the monetary incentives had a greater impact
on performance improvement (31.7%) than the recognition (24%) and performance feed-
back (20%); (b) recognition produced relatively stronger effects on performance than per-
formance feedback. These findings represent the first time that the most commonly used
incentive motivators such as money, recognition, and performance feedback have been
empirically shown to have different effect magnitudes on work performance when all
three reinforcers are applied through the same, conceptually grounded, and empirically
verified model of behavioral management. Although monetary incentives had a relatively
bigger impact, recognition still held its own as being an important way to improve per-
formance, especially when compared to a traditional pay for performance program (24%
versus 11%) that did not use the above- mentioned OB Mod. application model.
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252 FRED LUTHANS AND ALEXANDER D. STAJKOVIC
CONCLUSION
The organizational behavior principle for this chapter is that providing recognition
leads to performance improvement. Because of the broad appeal and common use
(at work, at home, at play) of informal social recognition (and some more formal
recognition programs), there are numerous examples (e.g. just think of how you
express personal gratitude, appreciation, and recognition to co - workers, spouses,
kids) and, thus, many guidelines for implementation. However, in the academic litera-
ture, except for those reviewed in this chapter, there are (still) surprisingly few stud-
ies that examine the impact of recognition on employee performance. Based on the
studies summarized here, we would suggest that the principle of contingent applica-
tion of informal recognition as an intervention to improve performance seems to
hold, and recommend its use in both organizational behavior and life in general.
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253PROVIDE RECOGNITION FOR PERFORMANCE IMPROVEMENT
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EXERCISES
1. Split into groups and, drawing from actual on - the - job or other relevant experiences,
discuss examples of both informal recognition that was provided and informal rec-
ognition that you think should have been provided but was not. How did each affect
the motivation of you personally and the others affected by this recognition (or lack
of it)? Why do you think informal recognition may be motivating (list several spe-
cific reasons to be discussed in class with other groups). Why do you think it may be
demotivating not to receive informal recognition (again, list several specifi c reasons
to be discussed).
2. Split into groups and design a formal recognition program for your company (or a
company one of the team members has worked for). After describing the type of
work and culture of your company, draw from this chapter ’s theory, research and
application guidelines, and discuss what you think this program would need to look
like to work. Outline several specific steps you would take. Also, identify some poten-
tial pitfalls (e.g. what would you be sure not to do).
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c14.indd 255 6/17/09 2:47:24 PM
14
Promote Procedural and Interactional
Justice to Enhance Individual and
Organizational Outcomes
JERALD GREENBERG
People in the workplace expect to be treated fairly and respond negatively when this
expectation appears to have been violated. In fact, among employees asked to identify
events that made them angriest, “ being treated unfairly on the job ” was found to be the
most popular response (Fitness, 2000 ). Considering this concern, it is not surprising that
the study of people ’s perceptions of fairness in organizations, known as organizational justice
(Greenberg, 1987 ), has been of considerable interest to scholars in organizational behavior
(OB) and related fields (Greenberg, 1996 , 2007 ).
By examining several key aspects of this work here, I identify a general principle of
organizational justice in addition to two more specific subprinciples. Following this, I discuss
special cases and exceptions to these principles as well as issues regarding implementation
of the principle. Finally, to illustrate the principles in action, I describe some case examples
drawn from incidents in a variety of organizational settings. To set the stage for these dis-
cussions, I begin by providing some background material that will put the major concepts
into perspective.
BACKGROUND: FORMS OF ORGANIZATIONAL JUSTICE
Organizational justice is widely regarded to be composed of at least three distinct forms –
distributive justice, procedural justice, and interactional justice. I now describe these.
Distributive justice
For the two decades spanning the mid - 1960s to the mid - 1980s, Adams ’s equity theory
( 1965 ) was the prevailing approach to fairness in the workplace. Derived from Homans ’
c14.indd 256 6/17/09 2:47:24 PM
256 JERALD GREENBERG
( 1961 ) conceptualization of distributive justice, equity theory focused on people ’s percep-
tions of the fairness of the relative distribution of outcomes (i.e. rewards) and inputs (i.e.
contributions) between themselves and others. The theory claims that people who per-
ceive these conditions as being unequal experience the negative state of inequity distress,
which they are motivated to redress by adjusting their own or the other ’s outcome or
inputs either behaviorally or cognitively.
Equity theory has received good support from many of the early studies designed to
test its basic tenets (for a review, see Greenberg, 1982 ). It also has been used to account for
a wide variety of organizational phenomena. For example, equity theory has provided a
useful basis for explaining why cuts in pay encourage factory workers to steal from their
employers (Greenberg, 1990a ) and why the performance of professional baseball players
declines during seasons in which (as free agents) they are paid less than they were the pre-
vious season (Sturman and Thibodeau, 2001 ). Although it is not studied as much as it was
during the 1970s, equity theory remains today ’s dominant conceptualization of distribu-
tive justice used by scientists in the fi eld of OB (Mowday and Colwell, 2003 ).
Procedural justice
Some theorists have criticized equity theory on the grounds that its exclusive focus on dis-
tributions is overly narrow. This precludes it from accounting for many of the feelings of
injustice people experience that cannot be captured in terms of relative outcomes and
inputs. In a seminal article, Leventhal ( 1980 ) expressed this sentiment explicitly by posing
the question, “ What should be done with equity theory? ” (p. 27). His answer called for
supplementing our understanding of distributive justice – the perceived fairness of how
outcomes are distributed – with a focus on procedural justice – the perceived fairness of the
manner in which outcomes are determined.
The seminal work on procedural justice was Thibaut and Walker ’s ( 1975 ) monograph
describing their program of research on fairness perceptions in legal disputes. Specifi cally,
these researchers compared legal systems differing with respect to the amount of control
disputants had over the procedures used to resolve disputes. Repeatedly, they found that
the procedures disputants believed to be fairest were ones that granted them a voice in
proceedings – that is, the capacity to influence outcomes (for an update, see Lind and
Kulik, 2009 ).
Leventhal ( 1980 ; Leventhal, Karuza, and Fry, 1980 ) reinforced the importance of voice
in fair procedures while also making two key claims: (1) that fair procedures are important
to people in contexts other than dispute resolution and (2) that when people consider fair
procedures in these contexts, they take into account factors in addition to voice. These
factors – Leventhal ’ s six “ rules of fair procedure ” – are as follows:
◆ Consistency. Procedures should be consistent across time and persons.
◆ Bias suppression. Procedures should not be affected by personal self - interest or blind
allegiance to existing preconceptions.
◆ Accuracy. Procedures should be based on completely accurate and valid information.
◆ Correctability. Procedures should include opportunities to modify and reverse
decisions (e.g. appeals and grievances).
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257 PROMOTE PROCEDURAL AND INTERACTIONAL JUSTICE
◆ Representativeness. Procedures should reflect the basic concerns, values, and outlooks
of the individuals who are affected by them.
◆ Ethicality. Procedures should be in keeping with the moral and ethical values held by
the individuals involved.
The conceptualizations of Thibaut and Walker ( 1975 ) and of Leventhal ( 1980 ) received
considerable support when, as recommended by Greenberg and Folger ( 1983 ; Folger
and Greenberg, 1985 ), they were applied to studying organizations (Greenberg, 1990b ).
Research in this realm grew dramatically after some of the earliest studies revealed two
important fi ndings.
First, perceptions of the fairness of procedures used in organizations predicted key
job outcomes (e.g. job satisfaction) independently of the effects of perceptions of the fair-
ness of those distributions themselves. For example, whereas distributive justice was the
primary predictor of workers ’ satisfaction with their raises, procedural justice was the pri-
mary predictor of people ’s feelings of commitment and trust (e.g. Folger and Konovsky,
1989 ; see Chapter 21 , this volume). Taking a different approach, Greenberg ( 1986a ) asked
workers to indicate the factors that contributed to the fairness of their company ’s per-
formance appraisal system (Chapter 5 ). Supporting the distinction between the two types
of justice, participants ’ responses fell into two independent categories, distributive factors
(e.g. pay as based on job performance) and procedural factors (e.g. performance rating
is based on accurate information).
A second important finding from early studies (e.g. Alexander and Ruderman, 1987 ;
Tyler and Caine, 1981 ) is that procedural justice accounted for significantly more vari-
ance than distributive justice in people ’s assessments of fairness in organizations. In other
words, fairness of procedures carried greater weight than fairness of outcome distribu-
tions. Not surprisingly, researchers took this as a mandate to focus on procedural justice,
which they have done ever since (for reviews, see Colquitt and Greenberg, 2003 ; Colquitt,
Greenberg, and Zapata - Phelan, 2005 ).
Interactional justice
As organizational scholars were coming to appreciate the importance of procedural jus-
tice, Bies and Moag ( 1986 ) expanded our thinking about fair procedures from the realm
of the structural into the realm of the interpersonal. They built upon procedural justice in
the same way that procedural justice built upon distributive justice. Specifi cally, Bies and
Moag ( 1986 ) introduced the highly influential notion of interactional justice : that people
consider not only the fairness of outcome distributions and the procedures that led to
them, but also the manner in which these outcomes and procedures are communicated.
People expect to have things explained to them adequately and respectfully and when they
believe that this has not occurred they feel that they have been unfairly treated. These
feelings, in turn, frequently trigger feelings of moral outrage and righteous indignation
(Bies, 2001 ), sometimes resulting in retaliation against the source of these feelings (Aquino,
Tripp, and Bies, 2006 ). (Some may believe that interactional justice is just a matter of
being nice, but this would be misleading. People who believe that the explanations they ’ve
received are inadequate report feeling injustice. And their responses often refl ect this.)
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258 JERALD GREENBERG
The concept of interactional justice remains popular today (Bies, 2005 ) for two very
practical reasons. First, procedural justice has a major effect on the way people respond
to undesirable outcomes and procedures. As I describe later, research has found that high
levels of interactional justice mitigate employees ’ negative reactions to distributive and/or
procedural injustices (e.g. Greenberg, 1990a , 1994 , 2006 ). A second reason for the wide-
spread interest in interactional justice is that practicing managers are in a good position to
bring about these benefi cial effects by virtue of the way they treat others in the workplace.
Although lower- level managers might be able to do very little about the distributions of
reward in their organizations and the procedures used to determine them, the capacity to
infl uence workers ’ feelings of interactional justice is under their control.
What, then, must managers do to demonstrate high levels of interactional justice? Two
factors are key. The first, referred to as interpersonal justice, involves treating people with
dignity and respect, showing that they care about the subordinate ’s personal feelings and
welfare. When people believe that they have been treated in a way lacking in demonstra-
tions of dignity and respect (i.e. when interpersonal justice has been violated), they feel
unfairly treated. The second, referred to as informational justice, involves giving people clear
and thorough explanations about the procedures used to determine outcomes. When
people believe that they have been denied information they believe they should have (i.e.
when informational justice has been violated), they feel unfairly treated.
Greenberg ( 1993a ) fi rst identified these two facets of interactional justice based on his
post hoc analysis of research on interactional justice to that time. Subsequently, Colquitt
( 2001 ) established empirically that interactional justice and interpersonal justice are inde-
pendent dimensions that are distinct from distributive justice and procedural justice.
Although Colquitt ( 2001 ) developed separate measures of interpersonal and informational
justice, the close conceptual relationship between the two often leads them to be com-
bined in practice. I follow this approach here.
The main principle
The idea of using fair procedures (e.g. giving people voice) and communicating with them
in a manner that shows dignity and respect may appear deceptively simple today, but in
the 1980s, they represented new approaches to understanding people ’s perceptions of
fairness in organizations (Greenberg, 1987 , 1990b ). Since that time, research and theory
on procedural justice and interactional justice developed rapidly – so much so, in fact,
that the broader umbrella concept under which they fall, organizational justice, is among
the most popularly researched topics in OB and related fields (Colquitt, Conlon, Wesson,
Porter, and Ng, 2001 ; Cropanzano and Greenberg, 1997 ; Greenberg, 2007 ).
Based on key findings of the research regarding procedural and interactional jus-
tice, it is possible to identify the following principle, which guides this chapter: Using fair
procedures (as defined by conceptualizations of procedural justice) and communicating them in a fair
manner (i.e. by sharing information in a way that demonstrates dignity and respect) enhances individual
and organizational outcomes. Given that people generally embrace the concept of fairness in
the workplace, this principle is unlikely to strike many as surprising. However, the many
studies that have been conducted in this field reveal that it is actually quite complex
and highly nuanced (Greenberg and Colquitt, 2005 ). I illustrate this here by breaking
down this broad principle into two narrower subprinciples and describing research
bearing on each.
c14.indd 259 6/17/09 2:47:25 PM
259PROMOTE PROCEDURAL AND INTERACTIONAL JUSTICE
PROCEDURAL AND INTERACTIONAL SUBPRINCIPLES
The studies conducted to date make it possible to identify two distinct subprinciples. The
first subprinciple focuses on the effects of procedural justice and the second subprinciple
focuses on the effects of interactional justice. My discussion of these will focus on both
their organizational and individual effects.
Effects of procedural justice
Consistent with Thibaut and Walker ’s ( 1975 ) work on voice, research has found that
people respond positively to organizational decisions to the extent that they have a say
in determining them, even if they cannot control the outcomes directly (Greenberg
and Folger, 1983 ). Research also has supported Leventhal ’s ( 1980 ) idea that fairness is
pro moted by adhering to the six earlier- noted procedural rules. In other words, people
respond positively to organizational decisions to the extent that they have been made
using these criteria (Greenberg, 1986a ).
Beneficial organizational effects of procedural justice. Several lines of research illustrate
these subprinciples of procedural justice. For example, employees ’ attitudes toward their
companies ’ appraisal systems are correlated positively to their beliefs about the oppor tunities
they have to express their own viewpoints (Dipboye and de Pontbraind, 1981 ; Lissak,
1983 ), even when controlling for the outcomes of those systems (Landy, Barnes - Farrell,
and Cleveland, 1980 ). Additional procedural factors, such as giving adequate notice, and
basing judgments on sound evidence also enhance employees ’ perceptions of performance
appraisal systems and the decisions resulting from them (Folger and Cropanzano, 1998 ;
Greenberg, 1986a , 1986b ).
Some of the earliest studies of organizational justice (e.g. Folger and Konovsky, 1989 ;
Sweeney and McFarlin 1993 ) have established that procedural justice is predictive of
organizational commitment whereas distributive justice is predictive of job satisfaction (for a
review, see Greenberg, 1990b ). Sweeney and McFarlin ( 1993 ) have referred to this as the
“ two - factor model, ” a term that reflects not only the statistical independence of distribu-
tive and procedural justice, but also the system - referenced nature of distributive justice
and the person - referenced nature of procedural justice.
Research also has shown that procedural variables similar to those identified by Thibaut
and Walker ( 1975 ) and by Leventhal ( 1980 ) also account for employees ’ reactions to other
organizational phenomena. For example, Kim and Mauborgne ( 1993 ) have noted that
employees ’ acceptance of their companies ’ strategic plans is enhanced to the extent that they are able
to engage in bilateral communication and are given an opportunity to refute ideas. Similarly,
personnel policies, such as the procedures used to screen employees for drug use (Konovsky
and Cropanzano, 1993 ) and those used to make personnel selection decisions (Gilliland,
1994 ) are better accepted to the degree that they incorporate various procedural elements,
such as accuracy, allowing for corrections, and providing opportunities for voice.
Several recent studies have focused on the association between procedural justice and
various forms of extra - role behavior. A meta - analysis, for example, found that organiz-
ational citizenship behavior directed at both individuals and organizations (Organ and Ryan,
1995 ) was predicted strongly by perceptions of procedural justice (Fassina, Jones, and
Uggerslev, 2008 ). Extending this idea to another form of extra - role behavior, Moon,
Kamdar, Mayer, and Takeuchi ( 2008 ) found that procedural justice was also predictive
c14.indd 260 6/17/09 2:47:25 PM
260 JERALD GREENBERG
of “ taking charge ” – discretionary behavior aimed at bringing positive change to one ’s organiz-
ation, such as by making useful suggestions for innovation (Morrison and Phelps, 1999 ).
Interestingly, employees ’ positive perceptions of procedural justice also have been linked
to extra - role behaviors aimed at customers. Specifically, hotel workers who believe that their
employers follow fair procedures have been found to deliver levels of service to guests
that exceed standard role requirements (Moliner, Martinez - Tur, Ramos, Peiro, and
Cropanzano, 2008 ). Together, these fi ndings are consistent with the notion that employees
who believe that their organizations have instituted fair procedures attempt to repay them
by going above and beyond the call of duty to help them (and, by extrapolation, their
customers).
Adverse health effects of procedural injustice. In contrast to the organizational outcomes
discussed thus far, another line of research has focused on health risks associated with
perceptions of injustice in the workplace. Such research has found that low levels of
organizational justice are linked to prolonged negative emotional states, such as stress
( Judge and Colquitt, 2004 ) and pathophysiological changes that are associated with health
problems (Elovainio, Kivim ä ki, Vahtera, Keltikangas - Jj ä rvinen, and Virtanen, 2003 ).
Additional research has revealed that the adverse health effects are more negative when
multiple sources of injustice are perceived instead of just a single source. Tepper ( 2001 )
reported evidence to this effect in a study assessing symptoms of clinical depression among
residents of a Midwestern US city. Specifically, he found that participants reporting the
highest levels of depression were those who experienced low levels of both procedural
justice and distributive justice. Individuals who experience higher levels of either form
of justice experienced significantly less depression. More recently, Spell and Arnold ( 2007 )
reported analogous findings. Instead of examining individual perceptions of injustice, these
researchers studied shared perceptions of justice within work units (to which they refer as
organizational justice climate). They found that workers ’ levels of depression were lowest
when collective perceptions of distributive justice and procedural justice were lowest.
Effects of interactional justice
Greenberg ( 1990a ) illustrated the effects of interactional justice in a study in which he
examined theft by employees who felt underpaid due to a pay cut. These workers
expressed their dissatisfaction by stealing twice as much from their companies when
officials treated them in a vague and uncaring manner while announcing the pay cut (i.e.
low interactional justice) as compared to when officials explained the reasoning for the pay
cut thoroughly and in a sensitive, dignified, and respectful manner (i.e. high interactional
justice) although they received the same exact pay cuts. This illustrates the subprinciple
of interactional justice: people better accept organizational outcomes to the extent that they have been
treated with high levels of interactional justice in the course of explaining those outcomes. I now describe
this principle more closely by discussing studies revealing the adverse effects that follow
when people perceive that they are experiencing low levels of interactional justice.
Adverse organizational effects of interactional injustice. The importance of both the inter-
personal and informational facets of interactional justice has been demonstrated in sev-
eral studies. For example, in a lab study, Greenberg ( 1993b ) manipulated informational
justice and interpersonal justice independently after paying participants less than expected.
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261 PROMOTE PROCEDURAL AND INTERACTIONAL JUSTICE
Participants were then given an opportunity to retaliate anonymously by taking money
back from the researcher. Retaliation was lower when the underpayment was explained
using high levels of interpersonal justice and high levels of informational justice. These
facets of interactional justice mitigated participants ’ beliefs about the unfairness of the
same undesirable outcomes, leading them to accept those outcomes and diminishing their
motivation to retaliate.
Another study by Greenberg ( 1994 ) demonstrated an identical effect in an organization
that was about to introduce a smoking ban. This policy change (which is likely to be rejected
by smokers) was introduced in a manner that systematically manipulated the amount of
information about the need for the smoking ban (i.e. informational justice) as well as the
level of sensitivity expressed regarding the difficulty the ban was likely to create for smokers
(i.e. interpersonal justice). Employees who smoked expressed greater willingness to go along
with the ban when it was thoroughly explained and when it was presented in a socially sen-
sitive manner (i.e. when levels of both interpersonal and informational justice were high).
In yet another setting, Lind, Greenberg, Scott, and Welchans ( 2000 ) interviewed
almost 1000 unemployed people about their reactions to being fired or laid off from their
jobs. They found that individuals who believed they were treated in a dignifi ed manner
by company officials in the course of being terminated (high interpersonal justice) and
who believed that the explanations they received about the termination decision were
adequate (high informational justice) were significantly less inclined to bring suit against
their former employers for wrongful termination than those who received more superfi cial
explanations delivered in a less sensitive manner.
Adverse health effects of interactional injustice. Just as procedural injustice appears to take
a toll on health, so too does interactional injustice. Indeed, high levels of stress were found
to be associated with perceptions of interactional injustice ( Judge and Colquitt, 2004 ).
However, just as adverse reactions to procedural injustice are exacerbated when combined
with distributive injustice, as noted earlier, so too are adverse reactions to procedural
injustice exacerbated when combined with interactional injustice.
This is illustrated in a study of some 5300 Finnish hospital workers whose levels of
stress were assessed along with their perceptions of procedural justice and interactional
justice (Elovainio, Kivim ä ki, and Vahtera, 2002 ). Stress measures consisted of self - reports
of physical and psychological health problems as well as the number of days absent from
work due to certified medical reasons (a practice that is customary in Finland for absences
in excess of three consecutive days). The researchers reported that all three measures of
stress reached their highest levels among workers who perceived that they experienced
low amounts of both interactional justice and procedural justice on their jobs. Low levels
of each form of justice contributed somewhat to the signs of stress measured, but their
combined effects were complementary, rather than redundant, in nature. More recently,
additional evidence of complementary effects was reported in another study using a
very large sample of Finnish workers from a variety of different occupations (Kivim ä ki,
Vahetera, Elovainio, Virtanen, and Siegrist, 2007 ).
In sum, it ’s clear that low levels of interactional justice – both the interpersonal and
informational forms – contribute to adverse organizational effects. And when combined
with low levels of procedural justice, low levels of interactional justice also take their toll
on the physical and mental well - being of employees.
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262 JERALD GREENBERG
SPECIAL CASES AND EXCEPTIONS
Having described the central principle of procedural and interactional justice and its
major subprinciples, I now identify several key qualifying conditions under which these
are likely to occur.
Outcome valence
Research has established that procedural justice ’s effects on the acceptance of organiz-
ational outcomes are qualified by the valence of the outcomes involved (Brockner and
Weisenfeld, 1996 ). Specifically, fair procedures matter more to people when outcomes are
negative than when they are positive – an effect known as the outcome process interac-
tion. Generally, employees receiving positive outcomes tend to be so pleased with what
they got that they are unconcerned with how they got it. However, concerns about pro-
cedures become salient when outcomes are negative (for a detailed analysis of this effect,
see Brockner, 2009 ). After all, people who don’t receive what they want are likely to ask
“ why? ” and the answers they seek are likely to be framed in terms of the procedures used
to determine those outcomes. As I explained elsewhere (Greenberg, 1986b ), people may
feel that it is inappropriate to express their dissatisfaction with undesirable outcomes for
fear of appearing to be “ sore losers,” but that it almost always is appropriate to ask ques-
tions about “ how ” outcomes were determined. Indeed, the basis for appealing grades in
most universities and the verdicts of court cases is based not on dissatisfaction with the
outcomes (although this may be the underlying motive for the appeal), but on the propri-
ety of the procedures used to determine them. And, because procedures hold the key to
understanding outcomes, their salience is heightened when outcomes are negative.
Although procedural justice might matter more when outcomes are negative than
when positive, this applies to people ’s acceptance of organizational outcomes, but not to
organizations themselves. Indeed, high levels of procedural justice can have benefi cial
effects on commitment to the organization in question even when outcomes are positive.
For example, Greenberg ( 1994 ) found that a smoking ban that was explained fairly had
stronger effects on smokers (for whom the impact was negative) than on non - smokers (for
whom the impact was positive). However, both smokers and non - smokers expressed high
levels of commitment to the organization when it used fair procedures. Apparently, organ-
izations that use fair procedures send strong messages about their underlying commitment
to fairness, which enhances employees ’ commitment to the organization regardless of the
outcomes they receive from it.
The limits of voice
If the granting of voice enhances acceptance of outcomes, then it may be assumed that
more voice promotes greater acceptance (see Chapter 24 for a discussion of participa-
tion in decision making). However, research suggests that such an assumption is falla-
cious. Specifically, two studies have shown that the benefits of the magnitude of voice are
non - linear. For example, Hunton, Wall, and Price ( 1998 ) conducted an experiment
in which they manipulated the number of supervisory decisions (0, 5, 10, 15, or 20) over which
c14.indd 263 6/17/09 2:47:26 PM
263 PROMOTE PROCEDURAL AND INTERACTIONAL JUSTICE
participants were given voice. Participants expressed greater satisfaction with decisions
over which they had any degree of voice than decisions over which they had no voice
at all. However, increasing levels of voice (from 5 through 20) had no effects whatsoever.
These data suggest that the benefits associated with voice appear to be a simple binary
function rather than a matter of degree.
Additional evidence suggests that under some conditions, at least, high levels of voice
actually may reduce satisfaction with outcomes. For example, Peterson ( 1999 ) measured
laboratory subjects ’ satisfaction with leaders in situations in which the parties were in con-
flict with each other over group decision problems. Corroborating earlier studies, Peterson
( 1999 ) found that satisfaction was greater among participants who were given an oppor-
tunity to explain their suggestions for solving a group problem (moderate voice condition)
than those who were not given any such opportunity (no voice condition). However, he also
found that when leaders gave participants surprisingly high levels of voice, participants
believed that the leader was behaving inappropriately by relinquishing his or her power, and
were less satisfied than they were in the moderate voice condition. In other words, Peterson
( 1999 ) found that satisfaction had an inverted - U relationship with magnitude of voice.
Because the findings of Hunton et al. ( 1998 ) and Peterson ( 1999 ) have not been rep-
licated outside the laboratory, it is unclear how generalizable they are to other settings.
However, they lead us to be cautious about the limits of the effects of voice that have been
described in the literature to date.
Voice and social sensitivity must be sincere
In addition to qualifications regarding the amount of voice given, another qualifi cation
of the principle of procedural justice concerns the sincerity of voice. Specifi cally, granting
employees a voice in the making of decisions leads them to believe that their voice will be
listened to, enhancing the chances that their opinions will be accepted, even if they are
not. Accordingly, employees who believe that the voice they are offered is insincere (such
as would be the case if no one is listening to them) will not be satisfied with the resulting
outcomes. In fact, insofar as employees ’ expectations about the outcomes first are raised,
but later are dashed when confronted with a less positive reality, they may be more dis-
satisfied than they would be if their expectations were never raised in the first place – a
phenomenon called the “ frustration effect ” (Greenberg and Folger, 1983 ). Not surpris-
ingly, the practice of falsely creating the illusion of voice in the workplace is considered
unwise insofar as it may backfire, leading employees to reject not only the outcomes, but
the organization itself (Greenberg, 1990b ).
The negative effects of insincerity also may be seen in the case of explanations for
undesirable organizational outcomes. In other words, for perceptions of informational
justice to be enhanced by the issuing of explanations for outcomes, it is necessary for
those explanations to be not only accurate and thorough, but also to be perceived as gen-
uine and sincere (Shapiro, Buttner, and Barry, 1994 ). Should employees suspect that the
explanations they are receiving about outcomes are insincere – or worse, manipulative –
the benefits of providing explanations are negated. In fact, under such circumstances, the
organizational agent ’s manipulative intent is likely to reflect negatively on impressions of
the organization itself, making matters worse (Greenberg, 1990b ). In other words, unless
c14.indd 264 6/17/09 2:47:26 PM
264 JERALD GREENBERG
employees are convinced that their superiors are “ being straight ” with them, the use of expla-
nations is likely to backfi re.
ISSUES IN IMPLEMENTATION
Having established what can be done to promote procedural justice in the workplace and
the benefits of doing so, I now turn to the matter of implementation. In other words, we
may ask if people actually do seek to establish procedural justice in organizations, and if
so, how they go about doing so. I now will address these questions.
Training managers in procedural justice and interactional justice
Acknowledging that it is in their own best interest for managers to follow the principles of
procedural and interactional justice outlined here, officials from several companies have
allowed researchers to train supervisory personnel in ways of enhancing these forms jus-
tice. The effectiveness of these training efforts has been documented in the literature (for
a review, see Skarlicki and Latham, 2005 ).
For example, Cole and Latham ( 1997 ) trained 71 unionized Canadian supervisors on
six key aspects of procedural justice whose relevance to disciplinary settings had been
established earlier (Ball, 1991 ): (1) an explanation of the performance problem, (2) the
demeanor of the supervisor, (3) subordinates ’ control over the process, (4) arbitrariness, (5)
employee counseling, and (6) privacy. The training consisted of role - playing exercises con-
ducted in small groups held over five half - days. To assess the effectiveness of the training,
two groups of expert judges evaluated the behavior of the supervisors who role - played
supervisors administering discipline in various test scenarios. Not only did the judges agree
that managers who were trained behaved more fairly than those in an untrained, control
group, but they also predicted that the trained group would perform better as supervisors
than the control group. Although Cole and Latham ’s ( 1997 ) findings do not assess the
effectiveness of training on the job, they suggest that managers can be trained to emulate
specifi c behaviors that enhance procedural justice.
However, two additional studies have shown that managers trained in various aspects
of procedural justice do, in fact, behave in ways that yield benefi cial organizational
results. For example, Skarlicki and Latham ( 1996 ) trained managers in various aspects of
pro cedural justice in an effort to enhance the level of organizational citizenship behavior
(OCB) among a group of union laborers. The managers were trained on various deter-
minants of procedural justice, including ways of providing voice, and techniques for
facilitating the fairness of the social interaction between labor and management. Training
consisted of lectures, case studies, role - playing exercises, and group discussions conducted
in four three - hour sessions held over a three - week period. Three months after training,
incidents of OCB were found to be higher among employees of the trained managers
than the untrained ones, suggesting that OCB can be enhanced directly by training man-
agers to behave fairly toward their employees.
More recently, Greenberg ( 2006 ) reported successfully training supervisors in ways of
promoting interactional justice among their subordinates. In this study, nurses from four
hospitals completed a scale indicating the extent to which they suffered symptoms of insom-
nia. Nurses in two of these hospitals experienced a cut in pay (resulting from a change
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265 PROMOTE PROCEDURAL AND INTERACTIONAL JUSTICE
in pay policy) whereas the pay of nurses in the other two hospitals was unchanged. The
researcher trained nursing supervisors in one of the hospitals in each group in ways of pro-
moting interactional justice among their subordinates but not the remaining hospitals (until
after the study was over). The training consisted of two half - day sessions in which cases,
role - playing exercises, and mini - lectures were used to train supervisors in three key skills
associated with interpersonal justice (treating others with dignity and respect, demonstrat-
ing emotional support, and avoiding intimidation) and three key skills associated with infor-
mational justice (providing complete and accurate explanations, communicating details in a
timely manner, and being assessable to others).
Reflecting the stressful nature of underpayment, insomnia was signifi cantly greater
among nurses whose pay was reduced than among those whose pay remained unchanged.
However, the degree of insomnia was significantly lower among nurses whose supervisors
were trained in interactional justice, when measured both immediately after training and
again six months later. These findings demonstrate the buffering effects of interactionally
fair treatment on reactions to underpayment. The study also establishes that the training
technique was effective in this regard.
Taken together, these studies reveal that managers may be trained effectively in tech-
niques for enhancing procedural justice and that such training is effective in improving
various aspects of organizational functioning. Unfortunately, we cannot determine how
long lasting the benefits may be. Also, because there have been so few investigations in
this area, we do not know precisely what forms of training are most effective at improving
specific dependent variables. Despite these uncertainties, it appears that the benefits of sys-
tematically attempting to promote procedural justice in organizations are very promising.
CASE EXAMPLES
The principles described here may be illustrated by cases demonstrating both the benefi ts
that result from promoting procedural justice and/or interactional justice and the conse-
quences of violating them.
New York City taxi drivers strike: the importance of voice
On May 12, 1998, most of New York City ’s 44,000 taxi drivers staged a one - day strike
that all but paralyzed commuting within the USA’s largest city (Allen, 1998 ). The action
was in response to the imposition of new safety rules by the mayor at the time, Rudolph
W. Giuliani. Among other things, the mayor required drivers to take a defensive driving
class, raised the fines for smoking in a cab, and revoked drivers ’ taxi licenses for being con-
victed of too many moving violations. Most drivers did not oppose these rules. However,
they were very threatened by the unilateral manner in which the mayor imposed them.
Specifically a union official representing several thousand drivers explained that they
favored the regulations, but were opposed to the mayor ’s disregard for the drivers by not
consulting them on this matter.
Therein lies the problem. Because Mayor Giuliani failed to consult the drivers or seek
their input in any way (i.e. denying them voice), they felt that they were unfairly treated. This
led them to protest as they did, souring relations between cab drivers and city offi cials.
Ironically, insofar as most drivers believed the mayor ’s plan was reasonable, the protest
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266 JERALD GREENBERG
could have been avoided by simply consulting with the drivers beforehand. By not doing
so, he demonstrated a level of arrogance and disrespect to which the drivers responded.
Interestingly, only 40 months later, Mayor Giuliani was praised for the high level of com-
passion he demonstrated in the wake of the 9/11 terrorist attacks on his city. Might it be
that his honor learned a lesson about interactional justice?
The new store manager: from injustice to justice
For many years, the manager of a large non - union supermarket in an affluent suburb of
a large city, Mr. X, struggled to keep his employees. Turnover, already high in retail stores,
was almost three times higher than the national average in this particular store. It was not
unusual for some employees, mostly college students working part - time, to quit in their
fi rst week.
Several newly resigned workers consented to exit interviews by phone. In almost all
cases, Mr. X was implicated as their primary reason for leaving. Some comments about
Mr. X were particularly eye - opening. When making work assignments, he never asked
anyone – except his friends – for their preferences and he never explained his decisions.
He even punished his least favorite employees by giving them shifts he knew they didn’t
want. Almost none of his decisions were based on seniority or job performance, just per-
sonal bias. On top of all this, he was always rude and inconsiderate, calling people unfl at-
tering names and berating them in front of others.
No tears were shed when Mr. X was terminated after about two - and - a - half years. His
replacement, Mr. A, could not have been more different. When it came time to make work
schedules, he asked the crew for their preferences and did his best to accommodate them.
When he couldn’t, which was not unusual, he explained why by pointing to the rule he
used to guide him. This rule gave higher priority to workers based on their seniority and
their job performance and it was completely transparent. He showed no favoritism. If
someone had a special occasion, such as a wedding, Mr. A checked with everyone to see
if they wouldn’t mind giving that individual higher scheduling priority than usual. So long
as it wasn’t abused, everyone went along with it, believing that they too would be able to
get what they wanted when a need arose.
This is only one thing Mr. A did that came as a pleasant surprise to the store ’s employees.
He also treated employees in ways that not only were much better than they were used
to under Mr. X, but also much better than they had experienced in other jobs. He always
smiled at the employees and asked them how they ’re doing. He took out time to talk to
them and to make them feel like they really matter. The employees opened up to him and
treated him as well as he treated them. Respect and trust was high and mutual.
After 10 months under Mr. A, turnover dropped to almost zero. Two people had to
leave because they transferred schools and one left because she graduated and took a full -
time job in another city. During goodbye parties for them, these people all expressed their
sorrow at having to leave. Not only was turnover low at the store, but the good reputation
Mr. A developed led to a stack of employees who wanted to work there. No recruiting
or training problems for the store meant considerable savings, helping the store become
more profitable. Today, the employees ’ only fear is that after Mr. A’s successes come to the
attention of offi cials at the chain’s headquarters he will be promoted and leave them.
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267PROMOTE PROCEDURAL AND INTERACTIONAL JUSTICE
CONCLUSION
The research and cases reviewed here suggest that both procedural justice and
interactional justice have beneficial effects on both individuals and organizations.
Although policies may keep some managers from doing everything possible to pro-
mote procedural justice and interactional justice, it ’s likely that many man agers
will, in fact, have opportunities to promote fairness by doing several of the things
described here. It ’s something managers can do. And, given the established benefi ts of
promoting procedural justice and interactional justice, the effort required to do so
would appear to be well worthwhile.
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EXERCISES
Unjust treatment
Recall in as much detail as possible a recent occasion on the job when you felt that a
superior treated you in an especially unfair manner. Jot down the details so you can keep
them straight in your mind when you answer the following questions about this experience.
1. Exactly what happened and how did you and other people involved in this incident
respond?
2. What could have been done to avoid the injustice in this situation?
3. What particular forms of justice – distributive, procedural and/or interactional –
were violated in this incident? Explain your reasons for this.
4. How did this incident make you feel?
A manager ’ s problem
Imagine that you are the new manager of a team of software engineers in your depart-
ment at a software development firm. You ’ve been on the job for only two months, and
things are not going well. Several of your most talented engineers have left the company
and you hear grumblings that others are looking to leave as well. Morale is low and people
are struggling to maintain the increased workload caused by the departure of their former
colleagues. After mustering the courage to approach you, one of the engineers confessed
that you are the problem: People think you ’ve been treating them unfairly. This came as a
shock to you, leaving you with lots of questions, but she didn’t offer any details because
she feared they might embarrass those who are implicated. As a result, you are now left
ruminating about this situation.
1. Potentially, what might you have done to lead people to think of you as unfair? For
each of these things, what specific changes in the company and/or your own behavior
might you attempt to change so as to avoid these problems in the future?
2. In addition to people leaving the company, what other signs might you find to indi-
cate that people are experiencing injustice?
3. Do you think that interactional justice training would help address this situation? If
so, why. If not, why not?
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Part V
TEAM DYNAMICS
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15
Foster Team Effectiveness by Fulfi lling
Key Leadership Functions
J. RICHARD HACKMAN AND RUTH WAGEMAN
Observers commonly view team leaders as mainly responsible for how a team performs.
An industrial team sets a new plant production record – and its supervisor subsequently
receives an award and is promoted. All applaud the captain of an airline crew who fi nds
a way to work around serious mechanical problems encountered in flight. An orchestra
conductor accepts the audience ’s ovation for an outstanding ensemble performance. In
each of these cases, the leader is viewed as the main cause of the team ’s success. It is the
same when the outcome is negative: perhaps the most common response to a string of
losses by an athletic team, for example, is to blame the coach. This attributional impulse
is so pervasive and powerful that we have given it a name – the Leader Attribution Error
(Hackman, 2002 , Chap. 7; Hackman and Wageman, 2005b ).
1
The tendency to attribute responsibility for collective outcomes to the leader has its
roots deep in the history of social science research. In the first experimental study of group
leadership ever conducted, Kurt Lewin, Ronald Lippitt, and Ralph White ( 1939 ) compared
the effects of three different leadership styles – democratic, autocratic, and laissez faire – on
group behavior and performance. Since then, there has been a near- continuous outpouring
of research to identify the best leadership traits and the behavioral styles that leaders should
exhibit in various circumstances. As noted elsewhere (Hackman, 2002, Chap. 7; Hackman and
Wageman, 2007 ), the record of that research is decidedly mixed – so much so that an alterna-
tive approach to thinking about team leadership is receiving increasing attention these days.
In the alternative approach, the leader is viewed not as the direct cause of team behav-
ior. Instead, the team leadership role is viewed as having two components: fi rst, identifying
those functions that are most critical to the success of a team in its particular circumstances,
1
This intense focus on the team leader is consistent with what Meindl and his colleagues
(1990; Meindl, Erlich, and Dukerich, 1985) have described as the “ romance ” of leadership.
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276 J. R ICHARD H ACKMAN AND R UTH W AGEMAN
and then doing whatever may be needed to get those functions accomplished (Hackman and
Walton, 1986 ; Wageman and Hackman, in press).
The functional approach to team leadership also has deep roots in social science
history. At about the same time that Lewin, Lippitt, and White were conducting their
experimental study of leader styles, Chester Barnard ( 1938 ) was writing a now - classic
book called The Functions of the Executive which explained what senior leaders must do to
help their organizations succeed. Barnard ’s core idea is encapsulated in the second word
of the title: leadership is seeing to it that certain necessary functions – establishing direction,
creating structures and systems, engaging external resources – are fulfi lled so that organiz-
ation members can work together well to accomplish shared purposes.
Some two decades after Barnard ’s book was published, Joseph McGrath ( 1962 ) picked
up the same theme and applied it to groups. The leader ’s main job, McGrath proposed, “ is
to do, or get done, whatever is not being adequately handled for group needs ” (p. 5). If a
leader manages, by whatever means, to ensure that all functions critical to group perform-
ance are taken care of, then the leader has done well. This approach to team leadership
leaves room for a wide range of ways to get key functions accomplished and, importantly,
it avoids the impossibility of trying to specify all the particular behaviors or styles that
a leader should exhibit in different circumstances.
For both Barnard and McGrath, the conceptual focus is identifi cation of the core func-
tions that must be accomplished to promote social system effectiveness – not who gets
them accomplished or even how that is done. In this view, anyone who helps accomplish
critical functions in any way they can is exercising leadership. Thus, at the most general
level, the principle of team leadership is this:
Effective team leadership is ensuring that the functions that are most critical for achiev-
ing team purposes are identifi ed and fulfilled.
Research has identified four subprinciples that flow from this general principle. These
subprinciples can be stated as four action imperatives and, as will be seen, they come in a
particular order:
Subprinciple 1. Decide whether or not a team is appropriate for the work to be accomplished.
Subprinciple 2. Decide what type of team to create.
Subprinciple 3. Create structural and contextual conditions that facilitate teamwork.
Subprinciple 4. Coach the team to help members take full advantage of their favorable
performance situation.
Before discussing these four subprinciples, we must first specify what distinguishes a work
team from other organizational units, and clarify what is meant by “ team effectiveness. ”
EFFECTIVE WORK TEAMS
The principles in this chapter apply only to work teams in organizations – that is, groups
of people who work together to perform identifiable tasks in organizational contexts.
Work teams generate outcomes for which members have collective responsibility and
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277 FOSTER TEAM EFFECTIVENESS BY FULFILLING KEY LEADERSHIP FUNCTIONS
whose acceptability is potentially assessable. They also must manage relations with other
individuals and groups. Usually, these entities also are part of the team ’s parent organiz-
ation, but on occasion the salient context is outside the organization – such as the oppos-
ing team and spectators for an athletic team. Although many other kinds of units exist in
organizations (e.g. departments, identity and reference groups, informal networks, and so
on) the present discussion applies only to organizational work teams as just defi ned.
When someone says a work team is or is not “ effective,” that person necessarily
(although perhaps implicitly) is making a value judgment. It can be helpful, therefore, to
specify explicitly what is meant by “ team effectiveness. ” The principles discussed here (and
the research on which they are based) rely on the following three - dimensional conception
of effectiveness.
1. The team ’s product meets or exceeds the standards of quantity, quality, and timeliness of the people
who receive, review, and/or use it. It is clients ’ standards and assessments that count in
assessing team products, not those of the team itself nor those of the team ’s man-
ager (who rarely is the one who receives and uses what a work team produces).
2. The team ’s work processes enhance members ’ capability to work together well. Effective teams
become adept at detecting and correcting errors before serious damage is done, and
at noticing and exploiting emerging opportunities. They are more capable perform-
ing units when a piece of work is fi nished than they were when it began.
3. The team contributes positively to the learning and personal well - being of individual members.
Teams can serve as sites for personal learning and can spawn satisfying interperson-
al relationships – but they also can de - skill, frustrate, and alienate their members.
Teams are fully effective only when their impact on members ’ personal learning
and emotional well - being is more positive than negative.
It is important to consider social and personal criteria, the second and third dimen-
sions, as well as task performance in assessing overall team effectiveness. And even task
performance, the first dimension, can be challenging to assess since it depends as much
on the values, standards, and perceptions of the people the group serves as on any simple
objective indicator.
Subprinciple 1: Decide whether or not a team is appropriate
for the work to be accomplished
Using teams to accomplish work can bring a number of advantages. For one thing, the
task itself can be larger in scope and therefore more meaningful and consequential than
would be the case for work carried out by any individual performer. Moreover, since the
work is not parceled out in small pieces among multiple performers, it is easier to estab-
lish direct two - way communication between the team and its clients, which can generate
prompt and trustworthy feedback about team performance. Tasks that require members
to take on a whole piece of work rather than just one small subtask also require that teams
be composed of diverse individuals who have different areas of expertise – and that, in
turn, can foster cross - functional exchanges that generate unanticipated ideas and insights.
Some types of tasks, however, are inappropriate for teams, such as those that require
sophisticated use of highly specialized individual knowledge or expertise. Another kind of
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278 J. R ICHARD H ACKMAN AND R UTH W AGEMAN
task that often is assigned to a team but should not be is creative composition. Writing a
group report would appear to have little in common with creating a novel, poem, or musi-
cal score – but both require bringing to the surface, organizing, and combining into an
original and coherent whole thoughts and ideas that initially are but partially formed and
that may even lie partly in one ’s unconscious. Such work is inherently more suitable for
individual than for collective performance. Although the individual who does the writing
can be helped greatly by the ideas, suggestions, and editing of other group members, the
actual composition of even relatively straightforward group reports invariably is done bet-
ter by one talented individual on behalf of the group rather than by the group as a whole
writing in lockstep.
Unfortunately, managers sometimes form teams without giving the matter much informed
or deliberate thought. Some managers, for example, assign work to a team because
they believe that teams invariably produce higher quality products than individuals – a
commonly held but erroneous assumption (Locke, Tirnauer, Roberson, Goldman,
Latham, and Weldon, 2001 ). Others may decide to assign a controversial piece of work
to a team in hopes of diluting, or at least distributing, their personal accountability for
whatever is produced. Still others may use a team as a way to engage the attention and
involvement of individual members and, they hope, thereby strengthen members ’ commit-
ment to whatever is produced.
One of the first decisions a leader must make in creating a work team, then, is to
ensure that the work actually is appropriate to be performed by a team and, if it is not, to fi nd
alternative means of accomplishing it. Those leaders who are not trapped by implicit
cognitive models or emotional imperatives that are biased toward teamwork weigh care-
fully the advantages and disadvantages of creating work teams. They avoid assigning to a
team tasks that actually would be better performed by individuals. And they never form
a team that is a team in name only.
Subprinciple 2: Decide what type of team to create
If a leader decides that a piece of work should, in fact, be assigned to a team, what kind
of team should it be
2
(see Chapter 16 )? The choice most likely to be made by leaders who
do not explicitly explore alternatives is the face - to - face interacting group. But there are
others, each of which is appropriate in some circumstances but not in others. The right
choice depends upon the answer to two questions:
1. Will responsibility and accountability for work outcomes lie primarily with the
group as a whole or with individual members?
2. Will members need to interact synchronously in real time, or can the work be
accomplished by members who work at their own paces and in their own places?
The answers to these two questions form the four- cell table shown Table 15.1 . As will be
seen, each of the four types of teams shown in the table is indicated for different types of work.
2
This section draws on material developed by Hackman and Wageman (2005b) and
Woolley and Hackman (2006).
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279 FOSTER TEAM EFFECTIVENESS BY FULFILLING KEY LEADERSHIP FUNCTIONS
Table 15.1 Common types of work teams
Responsibility/accountability for outcomes
Individual members Team as a whole
Real-time
interaction
Level of synchronicity
Asynchronous
interaction
Surgical teams Face-to-face teams
Coacting groups Distributed teams
Note: Adapted from Hackman and Wageman (2005b).
Surgical teams. Teams in the upper- left quadrant are what Frederick Brooks ( 1995 ) has
termed surgical teams (see Chapter 17 ). Responsibility and accountability for outcomes lie
primarily with one person, the surgeon, but accomplishing the work requires coordinated
interaction among all members in real time. Brooks, who managed IBM ’s System 360
programming effort many years ago, argued that software development teams should be
structured the same way.
Members of surgical - type teams provide the lead member, the person mainly respon-
sible for team product, all the information and assistance that they can provide. This
kind of team is indicated for work that requires a high level of individual insight, exper-
tise, and/or creativity but that is too large or complex to be handled by any one member
working alone.
Coacting groups. Individual members also are primarily responsible for outcomes in coacting
groups (the lower- left quadrant in the table). Each member ’s work does not depend upon
what the others do, and the output of the group is simply the aggregation or assembly of
members ’ individual contributions. Because members are performing independently there
is no particular reason for them to coordinate their activities in real time.
Members of coacting groups typically have the same supervisor, and may or may not
work in proximity to one another. A great deal of organizational work is performed by sets
of people who are called “ teams ” but that really are coacting groups – perhaps because
managers hope the benefits of teamwork can be obtained while continuing to directly man-
age the work behavior of individuals. Coacting groups are indicated when there is minimal
need for interdependent work by group members who can, in effect, operate in parallel.
Face - to - face teams. In these teams (the upper- right quadrant of the table) members are co - located
and work together interdependently in real time to generate a product for which they are
collectively accountable. Face - to - face teams are what people usually have in mind when they
use the term work team, and the bulk of the existing research literature on team behavior and
performance is about them. Such teams are indicated for a wide variety of tasks for which
creating a high - quality product requires coordinated contributions in real time from a diversity
of members who have complementary expertise, experience, and perspectives.
Distributed teams. In the lower- right quadrant of the matrix are distributed teams (some-
times also called virtual teams – see Chapter 32 ). Although members of distributed teams are
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280 J. R ICHARD H ACKMAN AND R UTH W AGEMAN
collectively responsible and accountable for work products, they are neither co - located nor are
they required to interact in real time. Instead, members use information and communication
technologies to exchange observations, ideas, and reactions at times of their own choosing.
Because members are not co - located, distributed teams can be larger, more diverse,
and collectively more knowledgeable than face - to - face teams. Distributed teams are especially
useful when it is logistically difficult or impossible for team members to meet regularly and
the work does not require high levels of interdependence among them. When they function
well, such teams can quickly and efficiently bring widely dispersed information and expertise
to bear on the work.
As increasing numbers of organizations have logged experience with distributed teams;
however, it has become clear that they are not a panacea. Although decision support sys-
tems can facilitate the performance of distributed teams, teamwork still tends to take more
time, involve less exchange of information, make error detection and correction more dif-
ficult, and result in less participant satisfaction than is the case for face - to - face teams (for
reviews of what is known about distributed and virtual teams, see Gibson and Cohen,
2003 ; Hertel, Geister, and Konradt, 2005 ; and Martins, Gilson, and Maynard, 2004 ).
Sand dune teams. Not included in Table 15.1 are “ sand dune teams, ” a special kind of
team that is not in any traditional sense a bounded work team at all. Instead, such teams
are dynamic social systems that have fluid rather than fixed composition and boundaries.
Just as sand dunes change in number and shape as winds change, teams of various sizes
and kinds form and re- form within a larger organizational unit as external demands and
requirements change. Sand dune teams may be especially well suited for managerial
and professional work that does not lend itself to the formation of fixed teams whose
members stay on the team for extended periods.
The organizational units within which sand dune teams operate typically are relatively
small (perhaps fewer than 30 members) and have relatively stable membership, which
makes possible the development of norms and routines that allow teams to form and
re - form smoothly and effi ciently. Dynamic teams of this type appear to have great potential,
but considerable research is still needed to document the specific conditions needed to
support them.
Subprinciple 3: Create structural and contextual conditions that facilitate teamwork
Two sets of conditions have been shown to foster the effectiveness of organizational work teams
(Hackman, 2002; Wageman, Nunes, Burruss, and Hackman, 2008 ; Wageman and Hackman,
in press). The first set, the essentials, are prerequisites for competent teamwork. If these essential
conditions cannot be established, it is usually better not to create a team at all. The second set,
the enablers, facilitate the work of the team. The enablers help a team take advantage of the full
complement of both members ’ capabilities and external resources in accomplishing its work.
These two sets of conditions are depicted in Figure 15.1 .
The essentials. The three essential conditions are (1) creating a real team (not a group of
people who are a team in name only) that is (2) composed of the right people for the
work to be performed and that (3) has a clear and compelling purpose or direction. When
present, these conditions provide a sturdy platform for teamwork.
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281 FOSTER TEAM EFFECTIVENESS BY FULFILLING KEY LEADERSHIP FUNCTIONS
Real Team
Right
People
Compellin
g
Direction
The
Essentials
Team Leadership
The
Enablers
Team Coachin
g
FIGURE 15.1 Essential and enabling conditions for team effectiveness
Real teams. Real work teams are intact social systems whose members work together to achieve
a common purpose. They have clear boundaries that distinguish members from non - members.
They work interdependently to generate a product for which they have collective, rather than
individual, accountability. And they have at least moderate stability of membership, which gives
members time and opportunity to learn how to work together well.
Real work teams can be small or large, can have wide - ranging or restricted authority,
can be temporary or long - lived, can have members who are geographically co - located or
dispersed, and can perform many different kinds of work. But if a team is so large, or its
life is so short, or its members are so dispersed that they cannot work together interde-
pendently, then prospects for team effectiveness are poor.
Right people. Well - composed teams consist of members who have ample task and inter-
personal skills. In practice, however, work teams often are created simply by fi nding people
who happen to be available, forming them into a group, and assigning them the work that
needs doing. If members have the knowledge, skill, and experience that the work requires,
so much the better. But no attempt is made to use what is known about the attributes of
prospective team members, or about how well people with different attributes are likely to
work together, in deciding who to put on a team.
That strategy of team composition, as common as it may be, is far more expedient than
effective (Hackman, Kosslyn, and Woolley, 2008). A better strategy is to identify the knowl-
edge and skill that the work requires and then to compose the team so that no critical area
of expertise is left uncovered. But that is about as far as it goes in many organizations. At least
these days, those who form teams may be disinclined to take into account “ softer ” individual
differences, such as the interpersonal skills of prospective members, in selecting people for
work teams – even though those softer attributes may be critical in enabling a team to actually
use the full extent of members ’ task capabilities in carrying out the team ’ s work.
Sound Supportive
Structure Context
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282 J. R ICHARD H ACKMAN AND R UTH W AGEMAN
Compelling direction. A team ’s direction is the specification of its overall purposes. Direction
is critical in energizing a team, in getting it properly oriented toward its major objectives,
and in engaging members ’ talents. There are numerous choices to be made in the course
of work on a task, and having a clear, concrete, and challenging direction almost always
facilitates decision making about such matters. Purposes such as “ serving our customers ”
or “ staying on top of developments in our sector, ” or “ increasing profitability, ” for example,
are so vague and general that they are unlikely either to challenge members to give their best
or to guide them in developing a good strategy for executing the work.
The most energizing statements of direction are those that are insistent about the end - states
(see Chapter 9 ) the team is to achieve but that leaves open the means members can use in pur-
suing those ends. Those who create work teams should be unapologetic about exercising their
authority to specify end - states, but equally insistent about not specifying the details of the pro-
cedures the team uses in carrying out the work (see Chapter 26 ). That state of affairs fosters
energetic, task - focused work (in the jargon of the day, team empowerment). By contrast, specify-
ing both ends and means mitigates the challenge to team members and underutilizes members’
resources. Specifying neither ends nor means invites fragmentation rather than focused,
purposive teamwork; and specifying means but not ends is the worst of all possible cases.
Direction is an essential condition because everything that follows depends upon it –
how the team is structured, the kinds of organizational supports that are needed, and the
type of coaching by team leaders that will be most helpful. Moreover, leaders who create
a compelling direction for their teams reduce considerably the amount of attention that
they must give to monitoring and managing team processes in real time.
The enablers. Three additional conditions enhance the performance effectiveness of real work
teams that have been well staffed and well purposed. These conditions are: (1) a sound team
structure, (2) a supportive organizational context, and (3) competent team - focused coaching.
Sound structure. A work team with a sound structure has a well - designed task, the right
number and mix of members to accomplish that task, and norms of conduct that foster
the development and use of task - appropriate performance strategies.
A well - designed team task is one that is both aligned with the team ’s purpose and high on
what Hackman and Oldham ( 1980 ) call “ motivating potential. ” This means that the task
is a whole and meaningful piece of work for which members have ample autonomy to
exercise judgment about work procedures, and that provides them with trustworthy data
about how well the team is doing (see Chapter 6 ).
Well - designed team tasks foster high, task - focused effort by team members, but creating
them can be a considerable challenge in traditionally structured organizations. It can take
some doing to reassemble into a meaningful whole work that, in the interest of presumed
effi ciency, previously had been partitioned into small, easy - to - perform subtasks. Moreover,
team autonomy is sometimes compromised by technical or procedural constraints that,
perversely, originally were implemented to prevent errors or foster product quality. Finally,
it can be difficult to arrange for teams to receive feedback from the clients of their work –
perhaps because clients or customers are far removed from the team or because they are
unaccustomed to giving feedback directly to those who serve them. In many cases, those
who form work teams have to draw heavily on their persuasive and political skills to gain
the cooperation of managerial colleagues in creating well - designed team tasks.
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283 FOSTER TEAM EFFECTIVENESS BY FULFILLING KEY LEADERSHIP FUNCTIONS
Well - composed teams consist of members who, collectively, have all the capabilities that
the work requires – and, if that is not possible, who have links with people outside the
group who do have the needed expertise. Well - composed teams also have a good mix
of members, people who are neither so similar to one another that they duplicate one
another ’s resources nor so different that they are unable to communicate or coordinate
well. Moreover, they are as small as possible given the work to be accomplished. Members
of large teams (for example, those with more than seven or eight members) can find it dif-
ficult to remain engaged in the team ’s work and to coordinate their activities effi ciently.
Managers often encounter serious obstacles, ranging from personnel regulations to politi-
cal realities, in attempting to compose their teams well. And, as was the case for team task
design, it can take considerable ingenuity and political skill to circumvent such obstacles.
Norms of conduct that are clear and explicit free team members from having to continu-
ously monitor and manage member behavior – and thereby can help them work together
in an efficient, orderly way in pursuing team objectives (see Chapter 18 ). All groups develop
norms that specify what behaviors are expected of group members and what behaviors
are out of bounds. These norms may be “ imported ” by members based on their previ-
ous team experiences, or they may be explicitly established early in a team ’s life, typically
when the leader initially launches the team. In either case, norms tend to remain in place
until and unless something fairly dramatic occurs to force members to reconsider what
behaviors are and are not appropriate (Gersick and Hackman, 1990 ). Especially valuable
in work teams are norms that actively promote continuous scanning of the performance
situation and proactive planning of group performance strategies.
Supportive organizational context. Team performance is facilitated when, in addition to
the mundane material resources needed for actually carrying out the work, teams have the
following three kinds of support.
◆
A reward system that provides recognition and positive consequences for excellent
team performance. It is important that performance - contingent recognition be pro-
vided to the team as a whole, not to those individual members a manager thinks
made the greatest contributions to the team product. Doing the latter risks introduc-
ing strong disincentives for task - oriented collaboration among members.
◆
A n information system that provides the team with all available data and data processing
tools which members need to competently plan and execute their work (see Chapter 32 ).
◆
An educational system that makes available to the team, at the team ’s initiative, techni-
cal or educational assistance for any aspects of the work for which members are not
already knowledgeable, skilled, or experienced – including, if necessary, the honing
of members ’ skills in working collaboratively on collective tasks.
Work team leaders sometimes find it difficult or impossible to obtain these kinds of
support, especially in established organizations that have been fine - tuned over the years
to support and recognize work performed by individual employees. State - of - the - art perform-
ance appraisal systems, for example, may provide reliable and valid measures of individ-
ual contributions but be wholly inappropriate for assessing and rewarding work done by
teams. Compensation policies may make no provision for rewarding excellent collective
performance and may even explicitly prohibit financial awards to teams. Human resource
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284 J. R ICHARD H ACKMAN AND R UTH W AGEMAN
departments may be expert in identifying individuals ’ training needs and in providing
courses to meet those needs, but training in team skills may not be available at all.
As was the case for the other aspects of team structure, aligning existing organizational
policies and practices with the needs of task - performing teams can be a challenging
undertaking, one that can require skilled negotiation with managerial colleagues to secure
the needed resources and organizational changes.
Subprinciple 4: Coach the team to help members take full
advantage of their favorable performance situation
The last of the three enabling conditions shown in Figure 15.1 , team coaching, is the only
one that relies mainly on direct, hands - on interaction between the leader and the team. It
is addressed separately in this section.
The role of team coaching is not to dictate the one best way to proceed with the work. It
is, instead, to help the team minimize its exposure to the dysfunctions that often are observed
in task - performing teams (which Steiner ( 1972 ) calls “ process losses ” ), and to maximize its
chances of capturing the potential synergies that teamwork can bring ( “ process gains ” ).
Teams that expend suffi cient effort on the work, deploy performance strategies that are well
aligned with task requirements, and bring ample knowledge and skill to bear on the work are
quite likely to perform well. By contrast, teams that operate in ways that compromise their
standing on these three performance processes are likely to underutilize their collective
resources and turn in suboptimal performances. The specific process gains and losses that
can develop for effort, strategy, and knowledge/skill are shown in Table 15.2 . Competent
coaching helps members work together in ways that foster process gains and minimize pro-
cess losses for each of these three performance processes (Hackman and Wageman, 2005a ).
Three caveats. Coaching activities that focus on the three task processes just described
can greatly facilitate teamwork. Moreover, task - focused coaching has been shown to be
significantly more helpful to team performance than interventions that focus mainly on
the quality of members ’ interpersonal relationships ( Woolley, 1998 ). There are, however,
three signifi cant qualifi cations to this generalization.
The first caveat is that team leaders typically do not spend much time actually coach-
ing their teams. This was seen both for leaders of analytic teams in the US intelligence
Table 15.2 Characteristic losses and gains for each of the three key performance processes
Effort
Process loss: “ Social loafing ” by team members
Process gain: Development of high shared commitment to the team and its work
Performance strategy
Process loss: Mindless reliance on habitual routines
Process gain: Invention of innovative, task - appropriate work procedures
Knowledge and skill
Process loss: Inappropriate weighting of member contributions
Process gain: Sharing of knowledge and development of member skills
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285 FOSTER TEAM EFFECTIVENESS BY FULFILLING KEY LEADERSHIP FUNCTIONS
community (Hackman and O ’ Connor, 2004 ) and for chief executive offi cers leading their
senior management teams (Wageman et al., 2008 ). In both studies, team members were
asked to report how their leaders spent their time. And in both settings they reported that
their leaders gave most of their attention to getting the work itself structured properly.
Next came running external interference – making sure that their teams had the resources
they needed for the work and removing organizational roadblocks. Third came coaching
individual members – dealing with personal issues and helping members overcome any
performance diffi culties they might be having. And last came coaching the team as a team.
Members reported that the team - focused coaching provided by their leaders was help-
ful, and research fi ndings confirmed that it was significantly associated with measured
team effectiveness. But most team leaders spent most of their time doing other things. For
many teams, then, the issue is not whether coaching provided by the leader is helpful, it is
whether the team actually is getting the degree of coaching that members want and need.
3
The second caveat is that even highly competent coaching is likely to be futile when the
other essential and enabling conditions for effectiveness are not in place. In a study of
service - providing teams, for example, Wageman ( 2001 ) found that properly designed teams
had fewer problems working together than did members of teams with unsound designs.
Moreover, well - designed teams benefited substantially from competent coaching – and were
not much hurt by bad coaching. Poorly designed teams, by contrast, experienced more per-
formance problems, they were not much helped by competent coaching – and they were
devastated by bad coaching. It is nearly impossible to coach a work team to greatness when
structural and organizational conditions undermine rather than support teamwork.
The final caveat is that even competent coaching of well - designed teams is unlikely to be
helpful if it is provided at a time when the team is not ready to receive it. Indeed, ill - timed
interventions can actually do more harm than good by distracting or diverting members from
other issues that do require their attention at that time. There are three times in a team ’s life
when members are especially open to coaching interventions (for details, see Hackman and
Wageman, 2005a ).
◆ At the beginning, when a team is just starting its work, it is especially open to moti-
vational interventions that focus on the effort members will apply to their work.
◆ At the midpoint, when a team has completed about half its work (or half the allotted
time has elapsed), it is especially open to consultative interventions that help mem-
bers refl ect on and revise their performance strategy.
◆ At the end, or when a major segment of the work has been fi nished, a team is ready
to entertain educational interventions aimed at helping members draw on their
collective experiences to build the team ’s complement of knowledge and skill.
3
In the study of analytic teams (Hackman and O ’ Connor, 2004), it turned out that peer
coaching was an extraordinarily strong predictor of measured team performance (the cor-
relation between peer coaching and team performance was .82). Members of these teams
may have realized, perhaps implicitly, that some level of coaching was needed if they were
to succeed in their interdependent work – and that they themselves were going to have to
provide it since their team leaders were not.
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286 J. R ICHARD H ACKMAN AND R UTH W AGEMAN
In sum, competent team - focused coaching can significantly reduce a work team ’s
vulnerability to process losses as well as increase the likelihood that members will generate
substantial process gains. The efficacy of coaching interventions, however, depends on
their being focused mainly on the three key performance processes discussed above. And
it depends on their being provided at the proper time in the team lifecycle.
Potency of the conditions. How much of a difference do the conditions discussed above
actually make in how well work teams perform? Three studies already cited provide some
indication of their potency.
4
In her study of field service teams, Wageman ( 2001 ) found
that team design features correlated far more highly with team self - management and
team performance effectiveness than did team leaders ’ hands - on coaching. Design fea-
tures correlated four times more highly with self - managing behavior than leaders ’ coach-
ing activities; and team design correlated 37 times more highly with team performance
than leaders ’ coaching activities.
5
In the Hackman and O ’ Connor ( 2004 ) study of intelligence analysis teams, the degree
to which all the essential and enabling conditions were present were correlated highly with
an independent, multi - attribute measure of overall team effectiveness. Moreover, those
teams in the research sample whose members were collectively responsible for work out-
comes had a significantly higher standing on the enabling conditions than did coacting
groups and, as would be expected, they performed signifi cantly better.
Finally, in the cross - national study of 120 senior leadership teams (Wageman et al.,
2008 ) the essential and enabling conditions together were also highly correlated with
assessed team performance. Because these three studies did not experimentally manipu-
late the conditions investigated, it is not possible to make unambiguous attributions about
causality from the findings. Even so, the three studies are consistent with the proposition
that the presence of the essential conditions (a real team, the right people, and a compel-
ling direction) and the enabling conditions (a sound structure, a supportive organizational
context, and ample team - focused coaching) can substantially increase the chances that a
team will perform effectively.
CASE EXAMPLES
The politics of supporting work teams
Team leaders rarely have much control over the work technologies, human resource pol-
icies, or organizational systems that affect the work of their teams. It sometimes is necessary,
therefore, for leaders to engage in political behaviors to establish and sustain the conditions
that foster team effectiveness. That was the situation in which Hank, a production manager
4
The task and interpersonal skills of individual team members (the condition referred to
earlier as “ the right people ” ) were not measured in these studies.
5
Recall, however, that there was a substantial interaction between leader coaching and the
design factors: the impact of competent coaching was greater for well - designed teams,
and the impact of bad coaching was greater for poorly designed teams. The comparisons
just reported are for coaching overall, without taking account of those interactions.
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287 FOSTER TEAM EFFECTIVENESS BY FULFILLING KEY LEADERSHIP FUNCTIONS
at a semiconductor plant, found himself (for details, see Hackman, 2002, Chap. 5, and
Abramis, 1990 ).
Although Hank had not had formal training in semiconductor manufacturing, he
came up with an innovative strategy for making memory chips. He converted exist-
ing serial production lines, the standard work design in that industry, into small teams,
each with major responsibility for one part of the chip his unit produced. Team mem-
bers learned one another ’s jobs, took on increasing responsibility for quality control,
and were given substantial authority to improve their own work processes. Even though
Hank had never read anything about the principles of team work design, he created a
good one.
Results were encouraging: Yields increased, production workers were embracing their
new responsibilities, and managers of other production units began to take an interest
in what Hank was doing. But then he began to hear some worrisome rumblings from his
teams, such as “somebody is making a lot more money these days than they used to – and
it ’s sure not us! ” Hank realized that he was going to have to provide more recognition
and reinforcement for teams that performed well. But he had no control whatever over
corporate reward and recognition systems.
His strategy was to invite two outsiders to visit the plant on the same day: a professor
from a well - known university who had been tracking Hank ’s innovations, and the firm ’ s
corporate vice president for human resources. Over coffee, Hank described to the profes-
sor and the vice president what he had been hearing from his teams. The conversation
then proceeded along the following lines:
P
ROFESSOR: This is serious. Unless you provide them some kind of rewards or
recognition based on team performance, the whole thing could crater.
HANK: Can’t do it. All I have to work with is my end - of - year bonus pool, and I can
only use it to reward outstanding individual performers. Doing that could undermine
the teams.
PROFESSOR: You ’re absolutely right, that would be the worst thing you could possibly
do. It probably would kill your teams.
HANK: Well, then, I guess I ’ m just stuck.
VICE PRESIDENT: Well, just a minute now. Let ’s think some more about this, see if we
can come up with any other possibilities. . . .
By the end of the meeting, Hank had obtained from the vice president an exception to
corporate compensation policy that enabled him to use his end - of - year individual bonus
funds to provide performance - contingent financial rewards to his teams. Because the cor-
poration took its compensation policy quite seriously, the special arrangement Hank nego-
tiated was an extraordinary accomplishment. But was his strategy in dealing with the vice
president perhaps a bit unethical? Inspect his behavior a little more closely. Did he lie to
anybody? No. Did he cheat anybody? No. Could he have made the decision to convert
the individual bonus pool to team incentive funds on his own authority? Also no. Did he
behave politically? Absolutely.
Hank ’s political behavior got him what he needed and did not have: the right to use
corporate financial resources in a way that could promote, simultaneously, the interests of
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288 J. R ICHARD H ACKMAN AND R UTH W AGEMAN
both the organization and his production teams. He could have used a different strategy to
try to achieve the same outcome, of course. But given his organizational role (a low - level
manager in a plant distant from headquarters), his corporate clout (none), and his exper-
tise (unschooled in intervention strategies) what he did may have been about the most
effective and appropriate thing he could have done. What would have happened if instead
he had sent a reasoned memo to headquarters formally requesting permission to deviate
from corporate compensation policy? He probably would still be waiting for a response.
Fulfi lling the leadership function of creating well - designed and well - supported work teams
often requires both the ingenuity and the kind of political skill that Hank exhibited.
Launching a cockpit crew
In commercial aviation, cockpit technology, the regulatory environment, and the culture
of fl ying significantly constrain the latitude that captains have to develop their crews into
superb performing units (Hackman, 1993 ). For most flight deck crews, there exists a pre-
existing “ shell ” for the team. That shell includes the properties of the aircraft to be fl own,
where it is to be flown, the roles of each crew member, basic work procedures such as
checklists, the resources available to the crew, and more. All of these features are pre - specifi ed
and none of them are under the captain’s direct control.
How that preexisting shell is brought to life, however, is very much under the captain’s
control. Research by Robert Ginnett has shown that what happens in the fi rst few minutes
of crewmembers ’ time together, when they first populate the shell and make it their own,
carries forward throughout a crew ’s life (Ginnett, 1990 , 1993 ). Crews led by captains who
merely took the time in their prefl ight briefings to affirm the positive features of the crew
shell – for example, by reviewing crewmembers ’ roles, emphasizing safety and timeliness
goals, reviewing the organizational supports available to the crew, and so on – fared bet-
ter than those that received no briefing at all or one in which the captain behaved in ways
that undermined the standard shell. Best of all were crews whose captains went beyond
mere affirmation and actively elaborated the shell by engaging their crews in discussion
of the unique circumstances of the trip that was about to begin. These captains used the
special opportunities always present when a group first comes together to transform a set
of individual pilots into an actual fl ying team.
GETTING IT DONE
Although most work teams do not have structures as detailed and specific as those of
cockpit crews just described, a leader ’s behavior at the launch of any work team can serve
essentially the same function – namely, to breathe life into the team ’s basic design and
thereby help the team start functioning on its own.
Good team beginnings are especially critical because the majority of key leadership
functions are fulfi lled, for better or for worse, by the time a team is only a few minutes old.
Consider the list of functions we have discussed in this chapter, and when in the life of any
given team each of them becomes relevant: deciding what kind of team is needed, design-
ing an interdependent task, choosing the right people, imagining a compelling statement
of purpose – all these are pre - work, cognitive tasks that are accomplished before members
actually come together for the first time. The rest of the conditions for team effectiveness
are brought to life when the team is launched.
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289 FOSTER TEAM EFFECTIVENESS BY FULFILLING KEY LEADERSHIP FUNCTIONS
Some leaders are fortunate in that they can draw on existing organizational processes
that make team launch relatively straightforward. At PepsiCo, for example, we found that
there were very strong norms about how people should operate both as team leaders and
as team members (Wageman et al., 2008 ). A carefully scripted “ on - boarding ” process for
teams was in place that showed leaders how to bring the main conditions for team effective-
ness to life in the first meeting. That process included: (1) identifying and highlighting the
core capabilities that each member brought to the team ’s work; (2) articulating the team
purpose and inviting members to respond; (3) establishing team boundaries by creating a sense
of shared identity, emphasizing what “ we ” share and “ our accountablities ” ; (4) identifying
the main resources the team would need and how to get them; and (5) putting the norms
and expectations for members on the table for the group to revise and ratify. Collectively,
these elements of the launch script animated all three essential conditions and all of the
enablers except for ongoing coaching. And, collectively, they established a positive trajectory
for teams that made later coaching interventions immeasurably easier.
If a team launch is successful, the team leader will have helped the team move from
being just a list of names to a real, bounded social system. The official task that the team
was assigned will have been examined, assessed, and then redefined to become the slightly
different task that members actually perform. And the norms of conduct specified by those
who created the team will have been assessed, tried out (sometimes explicitly but more often
implicitly through members ’ behaviors), and gradually revised and made the team ’s own.
This picture of team leadership as cognitive pre - work combined with an animating
launch stands in stark contrast to popular images of team leadership: the conductor wav-
ing his baton throughout a musical performance or the coach shouting from the sidelines
during the game. This alternative view of team leadership requires giving exquisite atten-
tion to the actions that breathe life into a team right at its beginning. And when that is
done well, many of the most important team leadership functions will have been com-
pleted before the team ’s actual work has even begun.
Imagine you soon will convene a new project team. How will you handle the fi rst few
minutes of that meeting? Should you begin by telling members the main objectives of the
project? Or should you ease into the purposes of the project gradually, perhaps starting
out by inviting each member to talk briefly about the contributions he or she has to make
to it? Or should you prepare a read - ahead handout describing the project and open the
meeting by asking members for reactions and questions? Should you strike a formal, task -
oriented tone, or be more casual and interpersonally oriented?
There is no one best style to use in launching a team. In fact, your actual behavior
at the first meeting will be significantly shaped by the circumstances of the moment: Is
everybody present when the meeting is supposed to start? Do all members already know
one another? How much enthusiasm do they seem to have for the project? Your behavior
also will depend on your own preferred style of operating: Are you more comfortable tak-
ing an active, assertive leadership role, or do you prefer to solicit input from others and
then summarize and integrate their ideas? Do you generally lead using a matter- of - fact
style, or do you like to liven things up with humor? Are you someone who can describe a
project in a way that engenders shared excitement in a group, or are you better at helping
each member identify the particular aspects of the work that he or she personally fi nds
most engaging? These and other considerations too numerous to mention – and certainly
too complex to preprogram even with the most complicated decision tree – together will
shape how you conduct your start - up meeting.
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290 J. R ICHARD H ACKMAN AND R UTH W AGEMAN
The great diversity of styles used by team leaders is seen not just when they launch a
team, but also in how they establish and maintain the other conditions that foster team
effectiveness – recruiting the right people for the team, clarifying its direction, getting its
structure right, arranging for contextual supports, and ensuring that the team receives
competent coaching at the appropriate times. The best team leaders use whatever styles
and strategies that suit them best. There is no one best way to create the essential and
enabling conditions for a work team.
There are, however, many wrong ways to go about leading a team – strategies and styles
that backfi re or whose short - term benefi ts are negated by long - term liabilities. One way to
get it wrong is to mislead those who are in a position to provide teams with the structures,
resources, or supports they need in their work. Beyond the moral problems of lying, disin-
genuous strategies destroy the credibility of those who use them when, inevitably, others
discover that what is claimed cannot be believed.
Another way to get it wrong is to mimic someone else ’s style or to follow textbook
prescriptions about how good leaders are supposed to act. It is always embarrassing to
observe someone trying to enact a leadership style that is not the person’s own – such as
the junior manager who admiringly adopts the style of the charismatic chief executive but
succeeds only in calling attention to the enormity of their differences. The junior manager
would be better advised to cease practicing in front of a mirror and instead to spend that
time and effort identifying and honing her or his own best style of leading.
The third way to get it wrong is to relentlessly enact one ’s preferred manner of leading,
even in the face of data that it is not working very well, and rely on a comfortable style
that is indeed one ’s own but that consistently yields unanticipated and unfavorable results.
This problem becomes especially severe when a leader sees that things have not gone well
but blames either the situation ( “ It was wired for failure ” ) or team members ( “ They just
wouldn’t do what I told them ” ). In such cases, there is no opportunity for self - correction
because the leader is not open to data that might suggest that his or her own actions con-
tributed to the poor outcome.
Excellent team leaders, by contrast, are aware of their natural styles – they know what
they like to do, what they can do easily and well, and what they can accomplish only with
difficulty. They learn over time how to exploit their special strengths and preferences, and
how to contain or circumvent their weaknesses. They attend carefully to the circumstances
of the moment, and vary their behavior in real time to exploit unanticipated leadership
opportunities and avoid obstacles that risk blunting their initiatives. Most importantly of
all, they are continuously alert for signs that their actions may not be having their intended
effects. And when they do discover a discrepancy between what they intended and what
happened, they use those occasions to further expand and strengthen their repertoire of
team leadership skills.
CONCLUSION
This chapter has explored the implications for practice of a functional approach to
team leadership. In this view, the essence of team leadership is to ensure that those
functions that are most critical for achieving team purposes are identified and ful-
filled. Anyone who contributes to that – whether a formal team leader, a regular team
member, or even an outside manager or consultant – is exhibiting team leadership.
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291 FOSTER TEAM EFFECTIVENESS BY FULFILLING KEY LEADERSHIP FUNCTIONS
Many leadership functions are best addressed before a team first convenes. Is a team
an appropriate device for accomplishing the work to be performed, or is there a bet-
ter way to get it done? What type of team should be created – a “ surgical ” team, a
coacting group, a traditional face - to - face team, a distributed or virtual team, or even
a fl uid “ sand dune ” team? How can those structural and organizational conditions
that are most critical to team effectiveness be created and sustained? And then, once
the team does get under way, how should it be coached – what should be done to
launch it well, what should be addressed when it nears the midpoint of the work,
and what should be done when a signifi cant piece of work has been completed?
Finally, we have emphasized that there is no one best personality or style for getting key
leadership functions fulfilled. Those who lead well do so by exploiting their preferred
styles and their special capabilities rather than by following some textbook prescrip-
tions or by mimicking how other successful leaders act. And, when a given leadership
function requires knowledge or skill that is beyond one ’s own capabilities, the best team
leaders do not hesitate to call on others to lend a hand in helping the team move for-
ward. Team leadership is not a solo act. At its best, it too is a team activity.
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EXERCISES
Leader attribution error
Begin by asking students to recall (1) the best work team they have ever been on, and
(2) the worst team they have ever been on. Then form them into three - person subgroups.
Each subgroup is to draw on members ’ good and bad team experiences to identify the one
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293 FOSTER TEAM EFFECTIVENESS BY FULFILLING KEY LEADERSHIP FUNCTIONS
factor that most powerfully explains the difference between the excellent and poor teams.
Then the class reconvenes and subgroups give their reports. A large number of the expla-
nations offered will have something to do with the personality or style of team leaders,
which can be used to launch a discussion of the tendency of observers to over- attribute to
leaders responsibility for team outcomes.
When that discussion has run its course, students are then asked to reconsider the
examples they came up with at the beginning, this time focusing on the degree to which
critical team functions had been fulfilled (whether by the leader or in other ways) for their
“ best ” and “ worst ” teams. To prime their thinking, the following questions can be posed:
(1) Was a team appropriate for accomplishing that particular piece of work? (2) Was the
right type of team created? (3) Were the essential and enabling conditions for effectiveness
in place? (4) Did the team have access to competent coaching to help members exploit the
favorable aspects of their performance situation and overcome or circumvent obstacles
to good performance? Discussion of these matters can provide a good review of both the
functions that are most critical to team effectiveness and the variety of ways that they can
be fulfi lled by team leaders and members.
Team Diagnostic Survey ( TDS )
The TDS is an instrument that assesses the standing of work teams on the conditions
discussed in this chapter. A typical classroom project is to ask students to use the instrument
as part of an analysis of the strengths and vulnerabilities of some team whose members
are interested in learning about and improving their team.
The TDS is taken online and a graphical assessment report is also provided online. For
a detailed description of the instrument and its psychometric properties, see Wageman,
Hackman, and Lehman ( 2005 ). The TDS is freely available for educational, research, and
government use; consulting and commercial users are asked to pay a fee to support program-
ming and user services. The instrument can be accessed at: https://research.wjh.harvard.
edu/TDS (educational, research, and government) or at: http://www.team - diagnostics.
com (consulting and commercial).
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c16.indd 295 6/17/09 7:00:21 PM
16
Compose Teams to Assure
Successful Boundary Activity
DEBORAH ANCONA AND DAVID CALDWELL
The basic principle we propose is that teams should be composed of individuals who can
effectively carry out external boundary activity. The central argument is that teams need
people who can bridge to the outside – people who can get resources, negotiate agree-
ments, and know who to contact for expertise. A number of studies (cf. Ancona, 1990 ;
Ancona and Caldwell, 1992 ; Gladstein, 1984 ; Hansen, 1999 ; Marrone, Tesluk, and
Carson, 2007 ; Wong, 2004 ) have shown that external boundary activity is a key predictor
of team performance. Therefore, an important element in a team ’s composition should be
ensuring that such activity takes place.
This principle is very broad. In our view, it applies most directly to temporary teams
or taskforces that are created for a particular purpose and then transfer their work product
to others within the organization or the broader market. Typically, these teams draw on
resources and information inside and outside the organization and often must gain the
support of other entities within the organization if they are to be successful. The greater
the complexity of the work and the higher the interdependence with other organization
units, the more the team will need to engage in a complex web of external relationships
to manage the coordination, knowledge transfer, and political maneuvering necessary to
get its tasks accomplished (Cummings, 2004 ). As organizations get fl atter, more global,
and more cross - functional, fewer work groups can remain isolated and focus solely on
internal activity and work. Thus, sensitivity to external issues is becoming increasingly
important to a wide range of teams.
JUSTIFICATION OF THE PRINCIPLE
It is our assertion that the external activities of interdependent organization teams are
related to their performance. Although relatively little research has directly addressed this
issue – in part because many of our theories of group activities were developed using
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296 DEBORAH ANCONA AND DAVID CALDWELL
laboratory groups that do not have external links – the notion that groups require effective
interaction with external systems has its roots in the writings of early social psychologists
(cf. Homans, 1950 ; Lewin, 1951 ). This general idea was expanded throughout the 1970s
and early 1980s by open systems theorists (Katz and Kahn, 1978 ), researchers studying
boundary spanning behavior (Roberts and O ’ Reilly, 1979 ; Tushman, 1977 ), and writings
on autonomous work groups (cf. Cummings, 1978 ). In addition, those studying innovation
have written extensively about the transfer of technical information across boundaries
(Allen, 1971 , 1984 ; Aldrich and Herker, 1977 ; Katz and Tushman, 1979 ). In general,
those results showed that in R and D teams with uncertain tasks, boundary - spanning
activity was related to performance. More recently, similar results have been found for
teams engaged in other types of development projects (cf. Scott, 1997 ).
We also assert that it is not just the frequency of external communication that is impor-
tant but rather the content of that communication. Frequent communication with outsiders
may be necessary for effective boundary management but it alone is not suffi cient. The
content and quality of interactions with outsiders will determine whether the team is able
to tap into the power structure of the firm, understand and manage how the team ’ s out-
puts fit into the broader workflow of the organization, and gain the information and the
expertise from outside the team ’s boundaries that are necessary for success. In a study of
45 product development teams, we found that team members engaged in different activ-
ities in dealing with outside groups and it was the extent to which team members engaged
in these activities that was related to team performance. We found that effectiveness in
product development was most likely when team members engaged in two sets of activ-
ities: (1) those that were designed to promote the team and secure resources and (2) those
that led to tighter links with other groups linked through the workflow. The frequency of
communication with outsiders as such was unrelated to the performance of the teams.
Interestingly, we also found that performance was negatively related to the frequency with
which groups engaged in broad scanning of the environment, particularly when these
activities were done late in the project (Ancona and Caldwell, 1992 ). Once the product
idea was developed, the more successful teams cut down on broad, general communi-
cation and increased the number of exchanges aimed at acquiring specifi c information
or coordinating distinct tasks. Less successful teams continued to seek out general infor-
mation about markets and technologies.
MECHANISMS FOR MEETING EXTERNAL DEMANDS
How does one compose a team to meet external demands? Three aspects of team com-
position seem particularly relevant: (1) the background characteristics of individual team
members, particularly the functional area to which the individuals are assigned; (2) the
connections of team members to relevant networks inside and outside the organiz-
ation; and (3) the configuration and nature of team members ’ assignments on the team.
Although background characteristics have been studied extensively in prior research, we
examine their effects on external linkages as well as internal dynamics. Network connec-
tions are the ties members have to individuals outside the group. Such ties represent the
potential resources team members can access. The third component, team confi guration,
represents the level of involvement individual members have with the team.
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297COMPOSE TEAMS TO ASSURE SUCCESSFUL BOUNDARY ACTIVITY
The first step in designing a team to meet external demands is to develop an under-
standing of the key resources members must acquire from other groups, learn the expec-
tations others have for the group, and understand how the group ’s product fi ts into
broader strategic initiatives of the firm. In part, this means acquiring knowledge about
the political “ structure ” of the organization as well as the location of information and
resources that will benefit the group. Clearly, some individuals can “ map ” this network of
information and resources better than others, and this mapping is a source of power for
individuals who have it and teams that can harness it (Krackhardt, 1990 ).
Once the critical links between the team and outside groups have been identifi ed, the
team can be formed to create these critical connections. Three design variables can be
used to manage these connections with other groups. We begin by describing the variables
and then lay out some of the issues to be considered in applying these variables to team
design.
Diversity in function
The first mechanism for designing a team that can effectively manage its boundaries is to
select people for the team who can represent and have expertise in the functional areas
that will contribute to the group ’s ultimate product. Based on a thorough review of studies
of groups in organizations, Williams and O ’ Reilly ( 1998 ) conclude that teams made up of
members from a variety of functional areas perform at a higher level than teams that do
not have that diversity.
For example, functionally diverse top management teams are more successful in mak-
ing administrative innovations (Bantel and Jackson, 1989 ) and in responding to environ-
mental shocks (Keck and Tushman, 1993 ) than are less diverse teams. There seem to
be both an internal and external rationale for the superior performance of functionally
diverse teams. Internally, such teams have a greater range of viewpoints and more infor-
mation exchange within the team (Glick, Miller, and Huber, 1993 ) than do less diverse
teams. This broader range of shared knowledge and experience should allow the group
to make more creative decisions than when the group has less information at its disposal.
Functionally diverse teams are also likely to have greater communication with those out-
side the group and have more links to external resources than less diverse groups (Ancona
and Caldwell, 1992 ). Studies of functional diversity have focused primarily on differences
in the functional assignments of team members; however, functional diversity can also be
intrapersonal. That is, individuals can vary in the number of different functions in which
they have worked. Some research suggests that groups made up of individuals who have
experience in different functions can have the same, or even greater, advantages of func-
tionally diverse teams (Bunderson and Sutcliffe, 2002 ).
Members ’ connections to other groups and individuals
A second tool for managing team boundaries is including individuals on the team who
have connections or relationships with others outside the group. The connections or ties
between individuals in organizations can vary in strength. A strong tie describes a close
relationship in which the individuals spend time together, know one another well and are
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298 DEBORAH ANCONA AND DAVID CALDWELL
likely to have helped each other in the past. A weak tie is a relationship that is more super-
ficial. Individuals know one another but do not have the level of closeness as is present
when there is a strong tie (Granovetter, 1973 ). There are a number of things to keep in
mind about ties to understand how they can affect boundary activities. First, because
strong ties require more time and effort to build and maintain than weak ties, individuals
can have many more weak ties than strong ties (Burt, 1992 ). Second, individuals can vary
in the pattern of ties they have with others. Some individuals will develop a large number
of weak ties but few or no strong ties. Other people may concentrate on developing a few
very strong ties but not have a large range of weak ties.
Both the strong and weak ties team members have with outsiders can help the team effec-
tively manage its boundaries but they do so in different ways (Hansen, 1999 ). If team members
have extensive networks of weak ties throughout the organization, it is relatively easy for
the team to learn about developments in other areas, resources that might be available
to the team, and who might have specialized expertise that could help the team. Simply
picking up the telephone and calling an acquaintance in a different part of the company can
help the team acquire valuable outside information.
However, sometimes a deeper involvement by an outsider is necessary in helping the
team complete its job. For example, sharing detailed information or helping a team adopt
a new technology for their project often requires a substantial amount of effort by the out-
sider. Individuals are likely to be more willing to expend this effort to aid the team if they
have a close, meaningful relationship with a team member – in other words, if there is a
strong tie – than if the relationship is superficial. Thus, if extensive help is needed from
some outsiders, having strong ties with those individuals can increase the chance that the
team will get the help they need.
Team configuration
A third approach to composing a team that effectively manages its boundaries is through
configuring the roles of team members. Most models of teams – particularly those
based on laboratory research – assume equal involvement and commitment of all team
members to the effort. We do not believe this assumption holds true for most teams in
organizations. Composing teams with the assumption that individual members will make
differential contributions to the team ’s effort provides an effective option for dealing with
boundary management issues.
When teams must deal with a large number of external entities or draw information
from many sources there are alternatives in how the team could be composed. The team
could contain members who represent all these important groups. Doing so has the poten-
tial to eliminate much of the need for boundary activity at the expense of creating a very
large team. On the other hand, a smaller team would not have direct representation from
all relevant groups and would therefore require greater boundary activity to guarantee
success. An effective way of dealing with the need for including representation without
expanding the size of the team is through configuring team member roles. That is, team
members can be assigned limited roles on a team, yet still provide external information to
the team or links to other groups.
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299 COMPOSE TEAMS TO ASSURE SUCCESSFUL BOUNDARY ACTIVITY
There are a number of ways of doing this (Ancona and Bresman, 2007 ; Ancona and
Caldwell, 1997 ). One approach is to bring experts into the team for a limited time or for
a very specific aspect of the project. This allows the team to make use of critical informa-
tion or expertise without having to integrate those individuals into the group. A second
approach is to shift team membership over time. Individuals who have specifi c infor-
mation or external contacts can temporarily join the team based on the boundary activ-
ities necessary at a particular time and then leave when their work is complete. A third
approach is to have some members be part - time on the team. Individuals whose expertise
or contacts are needed over the length of the project, but who may have other demands
on their time or somewhat limited knowledge of broader project issues could serve on the
team on a part - time basis. Finally, the decision - making roles of team members could be
differentiated. For teams working on highly complex, interdependent projects, the need
for information and coordination with other groups may be too high to be accomplished
exclusively through boundary management or the part - time or part - cycle involvement
of some members. Such situations may require the expansion of the team. However,
as the team grows in size, difficulties in decision making and coordination may arise.
One response to this is to develop a two - tiered membership made up of a relatively
small number of core members – who play a major role in decision making – and a larger
number of peripheral members – who play a more limited role – but are nonetheless fully
fl edged team members.
APPLICATIONS OF THE PRINCIPLE: USING FUNCTIONAL DIVERSITY,
T
IES, AND TEAM CONFIGURATION FOR TEAM COMPOSITION
Before deciding who to put on a team, it is important to identify the critical external con-
tacts the team must rely on to be successful. In a real sense, this involves developing a
“ map ” of the external environment, both inside and outside the organization. This map
should not simply identify the direct contacts the team must have – for example, a process
improvement team must coordinate with the information technology function – but also
identify sources of general information that can help the team understand the issues it will
face. Once a map has been developed, the tools we described can be applied.
First, the team should contain individuals from the range of functions that will be
responsible for the product or process under development. In particular, if the team needs
to engage in ongoing coordination around such things as specifications or schedules,
including people from the affected functional areas on the team will make the coordi-
nation easier.
A second design principle is to include members on the team who have appropriate
connections to others in the organization. Selecting team members based on their net-
work connections may offer advantages over simply choosing people based on the func-
tion they are in. First, it may not always be possible to select on function given the need
for individuals to have particular skills necessary for the project. Second, function may be
a rough index of the person’s network and considering the team members ’ connections
may allow for a more precise ability to deal with specific external issues than simply select-
ing on the basis of function (Reagans, Zuckerman, and McEvily, 2004 ).
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300 DEBORAH ANCONA AND DAVID CALDWELL
In our view, team members should collectively have a mix of strong and weak ties with
other individuals. It is important to have individuals on the team who understand the
knowledge and resources that may be spread out through the entire organization and even
outside the organization. This implies that the team needs members who are connected
to a wide range of different networks both inside and outside the organization. In other
words, the team needs an extensive set of weak ties. However, it is at least as important
that the team have deep connections with the groups with whom it must directly interface
and work with to solve problems. This implies that the team includes members who have
strong ties with other individuals who are in positions to provide resources or information
to the group. Without a strong tie to a team member, an outsider may not be willing to expend
effort in helping the team to meet its goals. Weak inter- unit ties help a project team search
for useful knowledge in other subunits and organizations but may not facilitate the transfer
of complex knowledge and large - scale assistance.
Finally, confi guring individuals ’ roles is a valuable tool for enhancing other decisions.
Effectively applying this concept requires understanding when and how individuals
will make critical contributions to the team ’s work. This requires a detailed map of the
environ ment and a clear understanding of the project. If a team needs extensive infor-
mation, but only at a particular time, including individuals on the team, but in a limited
way may allow the “ external resources ” of the team to be expanded without permanently
increasing the size of the team. Individuals can be assigned to different roles on the team,
whether it is by having a limited role in decision making or by serving on the team for a
limited time. Team membership can also shift over time. This approach is taken by many
research and development teams, which is to shift the team ’s membership as the technical
challenges of the project evolve.
MODERATORS AND LIMITATIONS
Our central principle is that teams should be composed to maximize external boundary -
spanning activity. Is this always the case? In answering this question, we think there are
two things that must be considered. First, there are moderating factors that must be con-
sidered. Second, the principle must be applied appropriately.
An obvious moderating factor to our general principle is the assumption that the team
members are competent to complete the task. Without competent and motivated people, no
matter how boundaries are managed, the team is not likely to be successful. Making
staffing decisions exclusively on the ability to bridge boundaries is likely to lead to fail-
ure. Drawing from a set of in - depth case studies, Ericksen and Dyer ( 2004 ) report that
the leaders of low performing development teams selected team members primarily on
“ political ” attributes such as the ability to represent the team to various stakeholders
rather than on competencies and skills. In contrast, leaders of high performing teams con-
sider skill and motivation as well as an ability to manage external boundaries.
A second important moderating factor is the nature of the group ’ s task . Consider four types
of team tasks that vary in the complexity of both the external or boundary activities and the
internal or cooperative activities they must accomplish to be successful (see Figure 16.1 ).
Along one axis are internal coordination demands that can be categorized as high
or low. High demands require that team members interact frequently to exchange
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301 COMPOSE TEAMS TO ASSURE SUCCESSFUL BOUNDARY ACTIVITY
Internal Coordination Demands
Low High
Low
External Boundary
gement
mands
1. Minimal interaction
2. Internal work and
relationship
management
High
Mana
De
3. External boundary
management
4. Multi-process
management
FIGURE 16.1 Critical processes for team performance
*
*
Based on a model found in Ancona and Nadler (1989).
information and coordinate work while low demands do not require such interaction.
Along the other axis are external coordination and political demands that can also be
high or low. High demands require that teams interact extensively with people external to
the team to access information, coordinate work, and acquire resources and support. Low
demands do not require this depth or complexity of external interaction.
Increasingly, as organizations become flatter and more flexible, as work becomes more
complex, and knowledge workers take on complex tasks in teams, more teams will be found
in cells 3 and 4, where external demands are higher than in the past. It is for these types
of teams that our principle holds. Cell 1 is hardly even a team, but rather more of a set of
people who have some aggregated output that is divorced from others in the organization.
Cell 2 could represent teams that are configured to brainstorm creative ideas or solve a very
circumscribed problem. Here all the necessary information resides in the team and there is
little need to have others implement the team ’s ideas. In each of these two cases, external
interactions are minimal and our principle would not apply. Instead, the team would need
to be designed with internal demands being dominant. The focus would be to fi nd the optimal
number of people who have appropriate information and skills and the motivation to work
together (cf. Campion, Medsker, and Higgs, 1993 ).
In contrast, cell 3 teams need to focus almost exclusively on external boundary management
while cell 4 teams need to carry out multiprocess management – internal work management,
relationship management, and external boundary management. Our principle holds for cell 3
while cell 4 requires that both internal and external demands be considered. In our view, more
and more teams are moving toward cell 4 because organizations are increasingly using teams to
replace formal structures and systems. Because of this, we believe that selecting team members
on the basis of their abilities to bridge to outsiders while still being able to share information,
handle conflict, and coordinate work with other team members will grow in importance.
The second issue has to do with applying these ideas appropriately. While the matrix
presented above presents teams as having a single task, most teams have tasks that change
over time so teams may move from one cell to another over their lives. For example,
product development teams move from: (a) exploring product ideas to; (b) prototyping
and exploiting technological achievements to; (c) exporting the product to others for
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302 DEBORAH ANCONA AND DAVID CALDWELL
manufacturing and marketing. Research has shown that while external boundary man-
agement is important throughout this process, it is more important for the exploration and
exportation stages and less important during the prototyping and exploiting stage. At a more
general level, the task demands at each stage of work need to be assessed and the team
composition needs to shift accordingly. It is because of these changing task demands
that team configuration is so important. It is through part - cycle membership, the use of
experts, and shifting roles that shifting external demands can be met.
Although we argue that staffing a team to deal effectively with external groups is key to
team success, it is important that the team be able to develop effective internal processes too.
A team needs to create an identity that affords some separation from the larger organization
(Yan and Louis, 1999 ). This may be a somewhat delicate balance. As Alderfer ( 1976 ) points out,
teams that have too much boundary activity may find it hard to set and keep that “ separate-
ness ” and to maintain the cohesion necessary to work as a team. On the other hand, a team
with too much cohesion and too strong an identity may be less likely to productively engage
external groups than are teams without such cohesiveness (Janis, 1982 ). Thus, composition
needs to be based on external demands while assuring internal communication and cohesion.
Designing a team to meet external demands may lead to a very heterogeneous group. This,
in turn, may increase conflict among team members and make coordination problematic.
Although different perspectives about the team ’s task may ultimately increase performance,
if these are too great or lead to conflict that is “ personal ” in nature, performance may suffer
(Pelled, Eisenhardt, and Xin, 1999; Reagans and Zuckerman, 2001 ). To prevent this, it may
be useful to do things to enhance the ability of the team members to work together. This
can be achieved by having some level of homogeneity or similarity among team members (e.g.
having people with similar tenure to facilitate communication, ensuring that there is a shared
goal among team members, etc.). It may also be facilitated by introducing management
practices that create identity and facilitate conflict resolution ( Jehn, 1995 ).
CASE EXAMPLES
The role of composition in the oil industry – alpha team
Two teams, in the same multinational integrated oil company illustrate the role of compo-
sition in managing external activities and in how the ultimate success of the projects were
affected by decisions about composition.. One of the major problems faced by integrated
oil companies is the depletion of reserves that can be obtained using traditional extraction
techniques. Both teams were formed to address different aspects of this problem.
The alpha project team was created to develop new exploration methods for a specifi c
geographic area. In addition, the team was to identify specific tracts in that area that the
company should try to acquire because they showed the promise of large reserves.
The alpha project team consisted of 17 members from three different geographic -
based organizations in the company who represented a number of departments based on
different geological and geophysical disciplines. Traditionally, these discipline - based
departments had worked sequentially on problems rather than as part of a team and our
interviews indicated that many individuals were skeptical of this team approach. Team
members were chosen for their technical expertise and were assigned to the project on a
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303 COMPOSE TEAMS TO ASSURE SUCCESSFUL BOUNDARY ACTIVITY
full - time basis. A group of three managers from one of the geographic organizations was
created to oversee the team ’ s efforts.
Although there was initial skepticism from some of the team members, the group
quickly developed effective processes for working together. The team held several semi-
nars and went on field excursions together to observe the geological area they were inves-
tigating. As is true of many large teams, alpha team members worked on different parts
of the task in cross - functional subgroups and used a common database to track the status of
the numerous activities. There was a great deal of informal communication between team
members and although they had limited experience working in teams, they soon found
that combining their knowledge led to solving key problems. Team members developed
strong ties with one another.
Other than bi - weekly meetings with the steering committee and informal contacts with
other experts in their respective fields, the team had little external contact. In fact, team
members spent so much time with one another and so little with their functional depart-
ments that others outside the team commented that the team had a tendency to isolate
itself from the rest of the company. The team leader took on nearly all the external activ-
ities of the team, particularly those with management. Team members primarily confi ned
their external activities to exchanging technical information with others.
How successful was the alpha team? The two goals of the alpha team were to
develop new exploration technologies and to apply these technologies to exploration of a
new field. As might be expected, based on the points we have made previously, the team
was very successful in finding new and effective ways to evaluate potential hydrocarbon
prospects but was not as successful in getting their ideas accepted and utilized within the
organization.
In the oil industry, companies may submit competitive applications to the government to
obtain a license to further explore and develop a field. Once a license is obtained there is fur-
ther exploration, and potentially, the development and the construction of a site. Deciding
when to bid on a site and gaining government approval requires careful analysis of the site
and accurate projections of the oil that can be extracted from it using various technol ogies.
Once technology decisions were made, the alpha team left it to the steering committee to
“ transfer ” the conclusions of their work to top management and the other groups who
were responsible for developing and submitting competitive applications. Unfortunately, the
transfer was problematic and it took a very long time for the results of the team to dissemi-
nate within the organization. Because of the delays and lack of broad support, the company
was never able to obtain licenses for the areas the alpha team studied and for which they
developed the technology. Some good did come out of the alpha team. Once the team was
disbanded and members transferred to other teams, some consulted on a similar project. On
this new assignment the old alpha team members were able to bring information and con-
tacts into the new team that allowed the alpha technology to be successfully applied. The
old alpha team members filled critical boundary roles in the new project.
The role of composition in the oil industry – beta team
At about the same time the alpha team was formed, a second team, the beta team,
also came into being. Like the alpha team, the beta team was created to come up with
innovative ways to explore new areas. The beta team differed from the alpha team in two
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304 DEBORAH ANCONA AND DAVID CALDWELL
important ways. First, it was responsible for both developing a new exploration technology
and completing a bid on a specific project. In other words, it took on the next phase of work
and had to implement their findings. Second, the beta team included members from two
other firms with whom a joint application would be prepared. (In the oil industry, compa-
nies often partner with one another for competitive advantage or to undertake a large bid.)
The team was composed of 15 experts from the company and one from each of the
partner companies. The beta team, like the alpha team, contained members with different
areas of geological expertise. Like the alpha team, team members also worked full time on
the project and shared common space. The team even used a similar process to the alpha
team, dividing the task and working in cross - functional subgroups. Like alpha, the beta team
was able to develop innovative technical solutions to problems in exploration.
Unlike the alpha team, this one added a new member six months after its formation.
This new member was a field development expert who would eventually work on the
application and developing the site that was chosen. Initially, he joined project meetings
as an observer but later moved on to be an active contributor. Also, unlike the alpha team,
this team did not have its external links handled by a manager, rather the team made
numerous presentations to top management about project organization, cross - functional
teams, alliances between oil companies, and their results. Despite its co - location, the beta team
was not seen by others in the organization as isolated.
The beta team was able to move quickly from technical problems to the application
phase. Although the fi rst application bid prepared by the beta team was rejected, the team
continued and prepared a new application that was accepted. The beta team was ulti-
mately held up as a role model of collaboration between functions and across company
boundaries.
How did composition contribute to outcomes of the alpha and beta teams? In both
cases, the teams were composed of individuals from different functional areas. Both teams
were co - located and had full - time members. There were substantial differences between
the teams, however. The alpha team members were selected strictly on the basis of their
technical expertise. Beta team members, especially those from the other companies, were
selected both for their technical skills and for their connections to important networks
throughout the organizations of which they were members. The beta team also shifted
its membership by bringing in a specialized expert midway through its work and assign-
ing this individual a specialized role. Perhaps most important, the beta team did not
“ delegate ” boundary activity to one person as did the alpha team. Successfully complet-
ing the types of projects alpha and beta were assigned frequently requires more boundary
management activity than can be accomplished by one or a small group of individuals.
Finally, the internal processes of the two groups were somewhat different. The alpha
group worked extensively with one another, usually to the exclusion of external activities.
This was not the case in the beta team.
CONCLUSION
Compared to other areas of investigation of small groups, composition has
been relatively neglected despite its obvious importance. Even the research that
has been done has not led to systematic conclusions. In a summary of research on
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305 COMPOSE TEAMS TO ASSURE SUCCESSFUL BOUNDARY ACTIVITY
composition, Moreland, Levine and Wingert note that “ . . . few researchers study
group composition, and no general theory guides their work. Progress toward
understanding group composition has thus been slow and sporadic ” (1996, p. 11).
Unfortunately, relatively little has changed in the last few years.
In our view, much of this lack of progress has come about because much of the
research has been done with groups that do not have meaningful external connec-
tions. Such groups do not reflect the true nature of most organizational groups. For
most groups in organizations, links with other groups and the external environment
are critical for success. Information and resources must be imported if teams are to
make effective decisions and the output of the group must be transferred to others.
We propose that selecting group members on their ability to facilitate these boundary
activities can be an important element in teams ’ success.
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EXERCISES
The following exercises ask you to apply the concepts to a real team. The first exercise is
most appropriate if you served on a “ project ” team. This could be at work or could be a
committee you have served on at school (organizing a food drive, etc.). The second exer-
cise is a tool for planning your next assignment. This could be a team project in a class or
some project at work.
The “ project ” team
Think about a team that you are familiar with – perhaps a team you are now on or were
on in the past. Try to identify the key external groups or individuals that could potentially
help the team. For example, some groups might be able to provide information or resources
to your team. Other groups or individuals might be able to help your team understand
and respond to political or strategic issues within the organization. Still other groups might
be responsible for either evaluating your team ’s work or integrating your work into their
own. For each of these stakeholders, determine whether information, resources, political
alignment, or task interdependence needs to be managed. Identify a team member who
will interact with each stakeholder. If there are no team members with the skills or con-
nections to manage these activities think about whom you might recruit from outside the
team, whether as a full - time or part - time member, to help manage these interactions.
Planning your next assignment
Based on reading this chapter, think about how you might approach your next team
assignment. What would you need to know to “ map ” the environment? How would you
staff the team? What do you need to consider besides the functional competencies needed
to do the task?
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17
Making Group Process Work:
Harnessing Collective Intuition,
Task Confl ict, and Pacing
GERARDO A. OKHUYSEN AND BETH A. BECHKY
Imagine, if you will, two groups with very similar members. Both have exceptionally tal-
ented individuals at the helm, committed participants, and compelling challenges that
they must respond to. However, while in one group members actively share information,
disagree with one another, and press ahead for action, in the other group members are
passive, have little discussion of the challenges for the group, and adopt attitudes that
make getting along more important than getting work done. The difference between these
two groups is at the crux of this chapter and answers the question, does group process
matter? By group process, we simply mean how group members go about interacting and
making choices to get their work done.
The groups we discuss include shop floor teams that develop process improvements,
surgery teams, cross - functional product development groups, police crisis teams, ongoing
task forces, film project teams, and top management teams. In general, these are groups
that demand active engagement and intense interaction among group members (Ashforth
and Fried, 1988 ; Eisenhardt, Kahwajy, and Bourgeois, 1997a ; Louis and Sutton, 1991 ).
Our central argument is straightforward. Although the membership of groups enables
and constrains many of their activities, a central element that causes some groups to suc-
ceed and others to fail is group process. With a positive group process, a team of average
individuals can perform better than a group of superstars with a bad group process. For
us, group process opens the doors to the performance of individuals as part of a successful
group. With poor group process, the doors to that performance remain closed.
Many people naively believe that effective group process requires group members to make
difficult process tradeoffs: conflict comes at the expense of speed, speed sacrifi ces getting
along, and getting along cannot happen with conflict. Yet we think that the reality of effec-
tive group process is different. After all, conflict is absolutely essential for effective groups,
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310 GERARDO A. OKHUYSEN AND BETH A. BECHKY
especially ones facing difficult choices in situations of high uncertainty (see Chapter 18 ,
this volume). Timing and speed matter too. A decision made too late can cost money or
leave an organization hopelessly behind the competition, leading to its failure. Group
members also need to be able to work together in an ongoing way to complete their work.
In our view, superior group process involves solving the classic tradeoffs of group pro cess,
not making them. That is, great group process is fast and responsive, with members act-
ing under pressure. It is also conflictual and respectful, with group members who can
disagree with one another and yet can walk away from meetings with mutual deference
and the will to work together in the future. Importantly, not all groups adopt the same
tactics to achieve great group process. Instead, groups adopt approaches that are ideally
suited to their own circumstances.
In this chapter, we describe three principles that help create great group process. These
are: creating collective intuition, stimulating task - related conflict, and driving the pace of
action. We argue that each of these antecedents consists of a cluster of tactics that shape
group process. These tactics are interrelated such that they work with one another, sup-
porting each other and offering synergies in group process. We also describe the pivotal
role of the leader in shaping the group process that emerges.
BUILDING COLLECTIVE INTUITION
One of the myths of group process is that relying on extensive information is a problem.
The argument goes like this: the cost of gathering information is very high, and large
amounts of information are often ignored anyway due to the excessive demands on the
time of group members (March and Simon, 1958 ; Simon, 1955 ). Therefore, it is not par-
ticularly useful to gather large amounts of information. In addition, since the perception
and interpretation of information is fraught with personal and social biases, information
must be treated with suspicion. As a consequence, group members should move ahead
without spending too much time worrying about having all of the relevant information.
In contrast, recent research takes a different view (Dean and Sharfman, 1996 ;
Eisenhardt and Bourgeois, 1988 ; Wally and Baum, 1994 ). Groups with great process
rely on more, not less, information than less effective groups. The difference is in the
kind of information that they use. Ineffective groups rely on either historical information
about past performance or speculative information about how the world might unfold
(Eisenhardt, 1989 ). In contrast, groups with superior process center their attention on
real - time and fact - based information about current operations.
Gathering information: exploiting expertise and profiting from variety
For many groups, the involvement of individuals in the front lines of the action is critical
to gather information. In film crews, individuals in every department are responsible for
bringing potential problems to everyone else ’ s attention (Bechky, 2006 ). Diffi culties staffi ng
a shooting crew, the absence of equipment, and the late arrival of actors or actresses are
all communicated to those affected, providing critical and timely information on the per-
formance of the crew. This intensity of information gathering is also evident in police crisis
teams, with officers trying to understand “ what ’ s happening ” in a moment - by - moment
manner (Okhuysen, 2005 ). Each officer on the team plays an important role in gathering
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311 MAKING GROUP PROCESS WORK
extensive real - time information. During missions, snipers double as observers, calling in
information they glean from their observation perch about suspects, such as movement
within an apartment or other activity. Perimeter team members cover the area surround-
ing the location, searching for possible escape routes for the suspects or places where adding
officers might be useful. At the same time, detectives contact city building departments to
get the blueprints for the apartments, homes, or businesses where suspects are holed up.
The typical outcome of this team is an efficient and safe resolution of standoff situations,
with suspects surrendering with no loss of life.
Further, research suggests that real - time information about the situation is particularly
effective when different members of the group are responsible for specific pieces of it
(Eisenhardt, 1989 ). In effect, members of groups with superior process adopt deliberately
distinct information roles in the group. Often these roles are along the lines of functional
expertise like engineering or marketing. This partitioning of responsibility for information
cultivates a variety of different perspectives and provides depth of knowledge by focusing
the attention of specific members on particular features of the situation. Not only is the
information likely to be more accurate given that the group is leveraging the expertise of
its members, but it is also likely to be obtained more quickly. This focus is not only effec-
tive for information that affects the internal operations of the crew, but also for external
information that can lead members to a more effective group process by focusing their
attention on important stakeholders (Ancona, 1990 ; Ancona and Bresman, 2007).
Of course, simply having knowledgeable individuals in a group paying attention
is of little use if their information is not available to be used collectively by the group.
Indeed, one of the main challenges of group process is to ensure that information is effec-
tively exchanged with all other members of the group (Stasser, 1992 ; Stasser and Stewart,
1992 ). In order to share and use information effectively, groups with great process engage
in frequent interactions. For example, some management groups set up “ can’t miss ” meet-
ings, police crisis teams engage in extensive information sharing during briefi ng meetings,
and film crews continuously update one another using walkie - talkies on set. In general,
these groups have a large number of regular interactions among members (Eisenhardt
et al., 1997a ; Bechky and Okhuysen, 2008 ).
The importance of real - time information, partitioned responsibility for that infor-
mation, and frequent meetings appears in many organizational groups. For example,
Eisenhardt ( 1989 ) examines group process among top management teams in start - up
ventures in the computing industry. In particular, she describes how the members of one
team, at a firm with the pseudonym Zap, operate. First of all, members of the manage-
ment team at Zap claim to “ over- MBA it ” and to “ measure everything. ” And they come
close. They focus their attention on a wide variety of raw internal and external measures
of current operations like bookings, backlog, revenue per employee, cash, and scrap in
preference to refi ned, accounting - based indicators like profi t.
Exploiting information: fostering positive interactions
and dissimilarity of knowledge
Why does this combination of real - time information gathered and collectively shared by
group members lead to effective group process? One reason is that this combination of
tactics is fast. In particular, continual tracking of information acts as an early warning
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312 GERARDO A. OKHUYSEN AND BETH A. BECHKY
system that allows group members to spot problems and opportunities sooner. Groups
that are mindful and attentive to such cues can respond more quickly (Levinthal and
Rerup, 2006 ; Weick and Sutcliffe, 2001 ). This is especially true when group members
have developed a routine for working together, either because they know each other well
(Eisenhardt, 1989 ) or because they act on well - rehearsed roles (Bechky and Okhuysen, 2008 ;
Edmondson, Bohmer, and Pisano, 2001 ). Therefore, when situations arise, members can go
right to the problem, rather than groping about for relevant information. In addition, the
development of distinct roles helps the information gathering process by ensuring that mul-
tiple perspectives are always represented (Eisenhardt, 1989 ), which in turn increases the
potential range of action in the group (Schweiger, Sandberg, and Rechner, 1989 ).
For many teams concerned with fast performance, real - time information gathered by
group members and shared together creates a collective intuition, a store of knowledge
based on the experiences of the group that is related to the challenges they face over time.
Through their experience, members develop an ability to build linkages among seemingly
disparate pieces of information and to recognize and process information in blocks or pat-
terns (Isenberg, 1986 , 1988 ). Through repeated exposure to data, these patterns become
recognizable, often subconsciously, even when there is only a small amount of current
information available. This pattern processing is faster and more accurate than processing
single pieces of information or waiting for additional information, and is a useful result of
previous experience. Through the development of a collective knowledge base, all group
members can also tap into relevant experiences when new situations appear (Thompson,
Gentner, and Loewenstein, 2000 ), allowing them to make sense of complex situations
quickly and elaborate responses to surprises (Bechky and Okhuysen, 2008 ). This “ collec-
tive intuition ” can help a group become faster and more effective in its work.
FOSTERING PRODUCTIVE TASK CONFLICT
A second reason that this combination of tactics builds effective group process is that the
intense interaction creates groups whose members are more likely to disagree. Familiarity
and friendship make such frank conversation easier because group members are less
constrained by politeness and more willing to express diverse views (Okhuysen, 2001 ). In
situations where developing this interpersonal familiarity is not possible, such as fi lm crews
where strangers come together for a few weeks to complete a shoot or emergency trauma
teams in hospitals whose membership is constantly changing, the presence of strong roles
can substitute for familiarity (Bechky, 2006 ; Klein, Ziegert, Knight, and Xiao, 2006 ). The
presence of well - defined roles in these groups instantly achieves two objectives. First, it
brings different perspectives to bear on a problem because each role represents a different
point of view. Second, because each member is expected to be an expert in his or her role,
bringing up problems or disagreements is a natural part of the role - based structure.
The familiarity that group members develop through their intense interactions is also
one element that allows them to disagree in the short term, and yet still get along in the
long term (Valley, Neale, and Mannix, 1995 ). Familiarity in a group develops as a conse-
quence of the interactions among members and is constantly reinforced as members dis-
cover information regarding the expertise and preferences of their co - workers (Reagans,
Argote, and Brooks, 2005 ). For groups where the deliberation of decisions is important,
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313 MAKING GROUP PROCESS WORK
such as top management teams, the development of familiarity makes it easier for group
members to separate task conflict from relationship or interpersonal confl ict (Eisenhardt,
1989 ). Familiarity keeps task conflict from becoming relationship conflict through trust
(Simons and Peterson, 2000 ). This trust comes from increased and intense interaction that
allows the group to build common goals, ensuring the commitment and participation of
all members. The familiarity that develops from intense and frequent interactions increases
interpersonal knowledge regarding beliefs and norms, and makes work interactions easier
(Jehn and Shah, 1997 ; Okhuysen, 2001 ; Shah and Jehn, 1993 ). In addition, groups
that are successful in the long term distinguish themselves by having a proactive stand
towards conflict, engaging conflict resolution strategies in a collective manner (Behfar,
Peterson, Mannix, and Trochim, 2008 ). As individuals increase their knowledge about
others and build trust in other members they are able to “ agree to disagree ” on substan-
tive issues without engaging in personal attacks or recriminations.
The use of real - time information as part of the deliberations of the group also helps
members engage in productive conflict and yet still get along (Eisenhardt et al., 1997a ).
The argument is as follows. In groups, disagreement can be viewed as personal or as issue
based (Amason, 1996 ; Jehn, 1995 , 1997 ; Schweiger et al., 1989 ). Personal confl ict tends
to create a dysfunctional process in which members listen poorly, fail to engage, and are
distracted from the problem - solving task for the group. In contrast, issue - based confl ict
is related to superior group process (see Chapter 18 ). By relying on facts, people tend to
attribute disagreement simply to issue - based differences among reasonable people. This
attribution helps group members to avoid becoming sidetracked by personal agendas, to
become task focused, and move more quickly to the central challenges facing the group.
It also helps them to avoid becoming bogged down in arguments about what might be.
Facts depersonalize discussion because they are not some member ’s fantasies, guesses, or
self - serving desires. An emphasis on factual data creates a culture of problem solving, not
personalities. The explicit anointing of individuals as experts adds to the effect, making
it easier for the group to call on them to share their perspective on a given issue (Stasser,
Stewart, and Wittenbaum, 1995 ). By providing specific areas of the organization that
members represent and are responsible for, the use of group roles for information gather-
ing helps to limit politicking by mitigating “ turf ” battles.
A key challenge for groups is developing interaction patterns that allow them to dis-
agree, so that they can reach the best outcome possible. Consider the following story. On
a hot and dusty August afternoon, a farming family was sitting on their front porch trying
to get some relief from the heat of the Midwest summer. One family member suggested
an outing to Abilene, about a two - hour drive away, to get some lemonade. Another mem-
ber agreed. Before long, the whole family was in the car, on the way to Abilene. With the
sun beating down on the roof, the trip in the crowded car was even more unpleasantly hot
than sitting on the family porch. The lemonade was not particularly memorable either.
In frustration, one member finally expressed regret at ever leaving the porch. With that,
everyone chimed in that they had never really wanted to go to Abilene in the fi rst place.
They had all simply assumed that everyone else wanted to go to Abilene, and so they
agreed to go too. The above story, dubbed the Abilene Paradox, has been told in a variety
of ways and has become a classic parable in organizational behavior (Harvey, 1988 ). In
the Abilene Paradox, every group member disagrees with the group choice, but does not
express that disagreement. No one voices objections because each assumes that the other
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314 GERARDO A. OKHUYSEN AND BETH A. BECHKY
group members agree with the stated position and its underlying assumptions. Because no one
expresses disagreement, no one realizes that conflict exists. This, in turn, leads to increased
internal pressures to self - censor opinions. In its extreme form, the Abilene Paradox leads to a
poor group process in which group members engage in activities or adopt directions that no
one in the group agrees with simply because no one is willing to be the first voice of dissent.
The Abilene Paradox is only one example of many that showcase a common prob-
lem: not enough conflict in a group – although many people intuitively worry about the
destructive effects that unimpeded conflict can have on groups. However, the reality is that
the hazard is often the reverse, that a group will not have suffi cient conflict and instead suf-
fer from passivity and lack of energy. Groupthink ( Janis, 1982 ), for example, is an extreme
phenomenon where conflict is not only avoided, but actively suppressed by members. In
situations where Groupthink emerges, a lack of critical thought and of realistic assessment
of alternatives are consequences of too little confl ict.
Groups with effective process have to exhibit extensive differences of opinion. In effec-
tive groups, members recognize that conflict is a natural feature of many organizational
situations in which reasonable people should and often do disagree. Further, as research
demonstrates, conflict stimulates innovative thinking, and creates better understanding
of the options. This leads to better choices and implementation. Without suffi cient con-
flict, group members have an impoverished process. They miss opportunities to question
assumptions and overlook key elements of their situation. Given the value of confl ict,
groups with effective process make confl ict part of that process.
Creating conflict: using devices to foster disagreement
One way that groups create conflict in their process is through team composition. For example,
top management teams that are diverse in terms of age, gender, functional background,
experience, and so forth are likely to see the world in different ways and so naturally cre-
ate conflict. That is, the natural differences that exist across their areas of responsibility
(e.g. marketing vs. logistics), focus of concern (e.g. labor unions vs. consumers), or other
differences (e.g. gender) generate perspectives that disagree with one another. For example,
it would not be unusual for a member representing manufacturing to be in confl ict with
the opinions of the marketing or R & D department.
Oppositional roles in a group may also develop through interaction, as group mem-
bers naturally organize into antipodal roles such as short vs. long term, or status quo vs.
change (Guetzkow and Gyr, 1954 ) in response to their perceptions of balancing the natu-
ral tensions within a group. In top management teams, one member who is particularly
concerned with the current status of the organization may have major disagreements with
someone whose focus is the future of the organization.
Another way in which conflict is introduced by members of a group is through the
deliberate development of multiple alternatives for any given issue (Eisenhardt, 1989 ;
Okhuysen, 2001 ). As different alternatives are explored, disagreements over assumptions,
outcomes, and objectives are clarified. This clarification, while conflictive, can lead to the
development of greater confidence among group members that they have adequately
explored the issues as well as a higher- quality process overall. This, in turn, helps make
sure that the best options, those that reflect the true underlying objectives of the group, are
the ones selected. Effective decision - making groups highlight this diversity of knowledge and
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315 MAKING GROUP PROCESS WORK
opinions and actively exploit it to uncover potential alternatives for the group (Schweiger
and Finger, 1984 ; Schweiger, Sandberg, and Ragan, 1986 ).
Task conflict can also be generated by using framebreaking heuristics that lead to new
perspectives and thinking. One such heuristic is forecasting (Eisenhardt et al., 1997a ).
Forecasting involves imagining future scenarios (i.e. assumptions about how the future
will unfold) and then playing out various options in light of these scenarios. As a result,
members can better grasp the range of possible futures and their options within them.
A related heuristic is backcasting. Using this technique, the group builds alternative future
scenarios. Having developed these different future scenarios, group members choose the
most desirable ones and then reason backwards to figure out how to achieve those futures.
For members of police crisis teams, these approaches are second nature (Okhuysen,
2005 ). During training sessions officers actively discuss different ways in which missions
can unfold, always with an eye to be prepared for that eventual contingency. Similarly,
during briefing meetings for missions officers discuss their preferences for the outcomes
of the mission (e.g. capturing suspects, collecting evidence, using low levels of force), and
work backward to develop approaches to the situation that will tip the odds in favor of
achieving those objectives.
Framebreaking heuristics can also involve members taking on particular roles within the
group. Sometimes the role - playing simply means taking the perspective of a key competi-
tor or opponent or the point of view of an important constituent in the group ’s discus-
sion. Group members may also take on a formal devil ’ s advocacy role (Schweiger and Finger,
1984 ; Schweiger et al., 1989 ). The devil ’s advocate is a group member who is charged
with questioning the assumptions and approaches of the group through critical evalu-
ation. Since this role is formalized, it allows the devil ’s advocate to deeply explore issues
and request clarification from other group members without the risk of censure that may
come to an individual who pointedly disagrees with the group. Overall, role - playing heu-
ristics allow members to argue and discuss alternatives with less risk of being reproached
by other members of the group (Feldman, 1984 ; Murnighan and Conlon, 1991 ).
In other groups, differences of opinion and the value they bring to the group process
take on different forms. For example, in surgery teams it is important that every group
member feel safe raising his or her voice to highlight problems or unanticipated situ-
ations (Edmondson et al., 2001 ). However, the strong hierarchies that sometimes exist in
these groups make it difficult, if not impossible, for low - status members to express their
opinions. Here, the development of psychological safety, trusting the group to respect and
support the individual who is raising his or her voice, is critical if the group is to perform
well. Skillful leaders and group members are able to create psychological safety by valuing
disagreement and giving voice to all members of the group (Edmondson et al., 2001 ). In
film crews, in contrast, many of the concerns for things that can go wrong, such as safety
for mechanical or electrical installations, are embodied in the roles of specifi c individuals.
Any conflict that derives from fulfilling those roles in a proficient manner, such as by rais-
ing worries about things that could go wrong, is acceptable in the situation (Bechky, 2006 ).
Exploiting conflict: using conflict to achieve positive outcomes
Why do conflict - creating devices such as diverse groups, framebreaking heuristics, mul-
tiple alternatives, and role execution lead to more effective group process? Obviously,
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316 GERARDO A. OKHUYSEN AND BETH A. BECHKY
they hasten the emergence of conflict and so accelerate the entire group process. Rather
than waiting or hoping that conflict will emerge, group members simply create that con-
flict. Less obviously, these tactics often give group members confidence that they are not
overlooking key information and perspectives. Armed with such confi dence, group mem-
bers are likely to have a faster process. That confidence is especially crucial in situations
where the barriers to group execution are as much emotional (i.e. fear of the unknown) as
they are cognitive. More obviously, these tactics clearly improve group process by helping
group members to come up with more varied viewpoints on their actions. They encour-
age group members to think over time, to reverse their usual path of thinking, and to
assume new lenses for viewing the activities of the group. Through all of these tactics,
group members are likely to develop a process that is more highly confl ictual.
Finally, the combination of a diverse group, multiple alternatives, and especially frame-
breaking heuristics and role structures affects group process by legitimating confl ict. This
helps group members to get along even as they disagree. For instance, when crew members
on film sets voice their concerns about task accomplishments to other group members, they
do so politely, often after first thanking their colleagues for things they are doing right
(Bechky, 2006 ). These tactics normalize conflict by encouraging group members to frame
conflict as less centered on personal differences and more centered on problem solving.
That is, they put a cooperative, not competitive, perspective on the group process. For
example, the use of a devil ’s advocate allows the group to formalize task conflict and use
it as part of its work process. The artificial addition of such task conflict into the group
allows members to capitalize on the group ’s problem - solving advantages, while at the
same time providing legitimacy for the emergence of conflict within the group. The legit-
imacy of conflict that is afforded group members through the adoption of such tactics
contributes to the prevention of premature and even false consensus.
PACING THE PROCESS
One of the striking features of the literature on group process is the lack of attention to
time. Of course, there are some exceptions (including those noted below), but very often
authors ignore or misunderstand time. Yet, in the world of real groups, time is critical. In
fact, with the emergence of the Internet, the convergence of consumer electronics with
computing and telecommunications, and the globalization of work, attention to time is
becoming crucial for many groups. In places like Silicon Valley, quips like “ snooze, you
lose ” or “ the worst decision is no decision at all ” underscore the importance of time. For
other groups, such as police crisis teams, the timing of action is critical: acting too soon
or not soon enough are both problematic. For film crews, pacing is central to maintaining
control over the work. Pacing keeps group members moving forward, even as it gives them
opportunities to adjust to unforeseen problems and unexpected opportunities, towards the
completion of their work.
Setting the pace: adopting a rhythm of action
One way to drive the pace of the group is simply by developing a natural rhythm of action.
For example, Eisenhardt ( 1999 ) describes how top management teams develop a sense
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317 MAKING GROUP PROCESS WORK
of how long strategic decisions should take. Through the experience of decision making
and the practice of self - reflection, they come to understand when a process is taking too
long, which implies that the group is either tackling too large an issue or is simply slowing
down. They also develop a sense of when the process is too fast, as in situations where
management teams become overly ambitious and, in the process, develop increasingly
fast spirals that lead to ineffective decision processes and outcomes (Perlow, Okhuysen,
and Repenning, 2002 ). Similarly, Brown and Eisenhardt ( 1997 ) studied product develop-
ment groups and found that the more successful ones developed a rhythm for their pro-
cess around consistent lengths of their projects. This rhythm accelerated and focused the
project teams. Overall, pacing in a group reflects the collective experience of individuals,
and yields more effective outcomes (Eisenhardt, 1999 ).
For other groups the pacing of action is quicker and progress on the task is more
immediate. Film crews, for example, place great value on making continuous progress –
every minute of production add to the total cost of the fi lm, because people and materials
are in place to do the work. This ongoing pressure for progress is reflected in the actions
of crew members, who are always ready to quickly move to the next task or to correct
mistakes as the situation demands (Bechky, 2006 ). Similarly, for police crisis teams every
second increases the danger in a situation since time gives suspects the opportunity to
respond, sometimes violently, to the actions of offi cers. Officers are therefore prepared to take
immediate action at every moment if the situation demands it, even when great uncer-
tainty remains (Okhuysen, 2005 ).
For project groups, the use of deadlines is another way to set the pace of the group pro-
cess (Gersick, 1989). Deadlines influence the group process by providing an easy measure
of the progress that the group has made. For example, if a group is one third of the way
to its deadline but has not completed one third of the work, members can easily con-
clude that an increase in activity is necessary. In a particularly interesting study, Gersick
(1989) found that groups with deadlines often paused at the midpoint of their schedule
in order to assess their progress towards their goals in light of the deadline. As a result of
this pause, the groups often had an opportunity to assess their group process and to make
major changes in that process in order to improve group performance.
More generally, milestones and even simple process interventions such as “ watch your
time ” or “ ask others about their information ” can effectively alter the process of groups.
Such milestones and simple group interventions often trigger group members to stop
and think, to evaluate their work, and to discuss potential changes in group process or
direction. During these interruptions, group members have an opportunity to focus crit-
ically on their process and look for better ways to accomplish the task (Okhuysen and
Eisenhardt, 2002 ). That is, the group members are able to address accumulated problems,
discuss future directions, and take action. The result is a group process with alternating
periods of both full engagement on the task and opportunities to change the direction
and process of the group.
Group members also set the pace of their work through the way in which they make
choices or decisions. Police crisis teams and film crews often face unexpected events that
can slow or stop their progress, and responding to them directs the pace of their work.
Rather than looking for perfect solutions to these challenges given the time pressure, in
these situations members “ make do ” with the materials and people they have at hand, and
they develop improvised responses to the unexpected events. Police snipers, for example,
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318 GERARDO A. OKHUYSEN AND BETH A. BECHKY
will use armored vehicles, utility poles, or even trees as lookout posts if other locations,
which could be better, safer, and more comfortable, cannot be found. Making do with
what is immediately available, or bricolage, allows different types of teams to continue mak-
ing progress on the task by overcoming the challenge that the unexpected situation repre-
sents (Bechky and Okhuysen, 2008 ).
For top management groups, using consensus with qualification as a decision rule is impor-
tant in pacing their activity (Eisenhardt, Kahwajy, and Bourgeois, 1997b ). Consensus with
qualification is a two - step process. First, group members try to reach consensus. But, if
they cannot do so, then group members make the choice by some sort of decision rule
such as the most involved member chooses, the group votes, or the leader decides. By for-
mally separating discussion and deliberation from the choice that has to be made, mem-
bers of effective groups can ensure that everyone ’s ideas and opinions are heard, even if
they are ultimately not part of the solution that is chosen. Consensus with qualifi cation
allows the group to move forward with its work rather than getting bogged down in end-
less discussions when agreement is hard to achieve.
Exploiting the pace: ensuring progress on the task
Why does the combination of rhythm, deadlines and milestones, simple interventions, improv-
isation and bricolage, and consensus with qualification lead to more effective group process?
The obvious reason is that each of these tactics contributes to moving the group along more
quickly. But more importantly, they can also drive a pace for the group, creating an internal
process metronome that keeps the group moving forward. So, for example, milestones help
group members to pace their activity (Okhuysen and Eisenhardt, 2002 ). Consensus with qual-
ification provides a way for the group to stop an endless search for consensus that can waste
time and energy as members pursue an objective that cannot realistically be achieved in a rea-
sonable timeframe. Similarly, deadlines set pace and close group discussion.
This combination of tactics also helps group members to oscillate their attention
from task execution to improvement of their problem - solving strategy and/or group pro-
cess. Such opportunities to stop and think create greater self - reflection. For police crisis
teams, these moments to stop and think occur away from their missions, during training
and rehearsal sessions or mission briefing and debriefing sessions, where the group can
collectively contribute to the reflective activity (Okhuysen, 2005 ). Self - reflection by these
teams stimulates thinking and conflict within the group by often providing opportunities
to examine and change group process and task strategy.
Finally, setting the pace through internal rhythms, deadlines and milestones, simple
interventions, bricolage, and consensus with qualification helps group members to get
along. Such tactics signal the need to focus on advancing the task, even when group mem-
bers disagree. They also provide a legitimate platform for group members to address issues
of ineffective group process including personal (as opposed to task) confl ict. Consensus
with qualification is particularly useful for helping group members to avoid the frustration
of endless consensus seeking in decision - making groups. It helps them to take a realistic
view of conflict as valuable and inevitable. At the same time, consensus with qualifi cation
lets group members resolve conflict (and maintain pace) in a way that is typically per-
ceived as equitable (Eisenhardt, 1989 ). Most group members want a voice in their group ’s
decisions, but rarely believe that they must always get their preferred choice.
c17.indd 319 6/17/09 2:50:08 PM
319 MAKING GROUP PROCESS WORK
Overall, tactics such as deadlines and milestones, rhythm, bricolage, consensus with
qualification, and simple interventions set a pace for group process that keeps groups on
track in terms of time while still offering opportunities for reflection and change in their
process. In contrast, groups whose members do not use these tactics are prone to ineffective
use of time. They may make decisions so quickly that they forget important information
or miss sight of their broader objectives (Perlow et al., 2002 ). More likely, they will become
bogged down in searches for consensus. These group members often stress the rarity of
what they do, rather than recognizing its repetitive nature. They oscillate between letting
critical issues languish and making “ shotgun ” moves with little thought.
LEADERSHIP
Thus far, we have argued that the tactics that are associated with creating collective intu-
ition, stimulating quick task conflict, and setting the pace of the group all contribute to
effective group process – that is, fast and high - conflict group process where members
nonetheless get along. In this section, we focus briefly on the important role that the leader
of the group plays in developing a great group process (see Chapter 15 ).
Guiding leadership: setting the tone for positive group processes
First of all, it is important to recognize that leaders have a disproportionate infl uence
on group process. This influence is sometimes exerted in a negative, even if unintended,
fashion. For example, surgeons can sometimes curtail the discussion of contrarian points
of view during operations, limiting the opportunities for team members to contribute to
the work of the group (Edmondson et al., 2001 ). But leaders can also use their asymmetri-
cal infl uence on group process more positively. This is particularly the case when they pro-
vide legitimacy or “ cover ” to others in the group. In the same surgery teams (Edmondson
et al., 2001 ), the surgeon in charge plays a disproportionate role in establishing the norms
of the group. When the surgeon is open to the opinions of others and facilitates refl ective prac-
tices in the team, members are more likely to point out problems and alternative solu-
tions, especially if doing so requires side - stepping the hierarchy of the operating room.
Similarly, junior members of trauma care teams such as interns are empowered to act by
the “ hands - off ” approach of attending doctors, which puts pressure on interns but also
gives them confidence to act to respond to the patients ’ needs (Klein et al., 2006 ). In decision -
making teams, the leader can adopt framebreaking heuristics such as devil ’s advocacy
more readily than can other members. By requesting multiple alternative approaches to a
problem, the leader legitimates differences of opinion.
Leaders can also disproportionately influence the process of the group by stimulating
explicit and even contrived attempts to have fun. Humor is effective within groups because
it relieves tension and improves the cooperative outlook of team members as well as their
listening skills (Eisenhardt, 1999 ). Humor bridges differences among group members as
well (Kahn, 1989 ; Ziv and Gadish, 1990 ). Humor works as a defense mechanism to pro-
tect people from stressful situations that can arise in groups. Using humor, people can
distance themselves from such situations by putting those situations into a broader life
context, often through the use of irony. Humor, particularly given its ambiguity, can blunt
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320 GERARDO A. OKHUYSEN AND BETH A. BECHKY
the threatening edge of negative information. Group members can speak in jest about
issues that might be threatening if said directly. Humor can convey serious messages in a
less threatening way.
CASE EXAMPLES
Blockbuster
The crew of Blockbuster, a large studio - funded film, arrives on the set and each member
receives a walkie - talkie, after which the head of each department reports for the kick - off
production meeting. Here, the first assistant director takes everyone through the shooting
schedule in detail, discussing potential problems with locations, equipment, effects, and
costumes. After the meeting, each lead passes on the information to the members of his or
her department, gathering ideas and suggestions on how to deal with the expected chal-
lenges and with potential problems. As production gets rolling over the next few hours
and days, crew members bump into colleagues they recognize, saying things like, “ Didn’t
we work together on Talk to the Animals in 2006? ” The cinematographer and the fi rst assist-
ant camera operator reminisce about the Rocky sequel they worked on in Philadelphia,
saying to a newcomer, “ We’ve been working together for 20 years.” They joke that in this
business, it sometimes feels like you are married to your colleagues.
Over the course of the next six weeks of production, there is a constant chatter about
what is going on, with up - to - the - minute updates on activities. There are constant conver-
sations about what is going on among people, sometimes in person and sometimes simply
over the walkie - talkies. On the grip channel, for example, the key grip informs his crew
that they are shooting a different scene from the one they had planned, saying, “ I ’ m sorry,
guys, we need to reorganize. I need four of you over by the technocrane. ” When unusual
incidents or concerns arise, crew members bring it to the attention of the person they
think should know. For instance, when an actor in a minor role trips and falls during early
morning filming and complains of a hurt wrist, five or six different crew members report
this injury to the unit production manager later in the day, when he arrives on the set.
Crew members also jump into action when they think they can help out, even if they are
not asked. When a fire starts in a garbage can on set, two location assistants grab a cooler
fi lled with water, run down the hill and extinguish the fi re.
The heads of departments meet frequently over the course of the day, formally and
informally. Particularly important are the meetings in the morning, when the work for the
day is discussed, and the ones at the end of the day, when they check in on the progress of
the shoot and talk over the scenes planned for the next day. When the executive producer,
for instance, asks “ What is going on with the aerial effects? ” both the cinematographer
and the unit production manager chime in. “ We are having some trouble with the weath-
er; it is too windy, and they are predicting more clouds and wind tomorrow. I don’t think
we can do it, ” says the cinematographer. But the unit production manager disagrees: “ No,
my weather service says it should clear up by tomorrow, and I think we should move ahead
with it. ” The executive producer considers the two different opinions and decides the
crew should prepare for the aerial shots the next day. Also at the end of every day,
the executive producer or the unit production manager reports on their progress to the
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321 MAKING GROUP PROCESS WORK
vice president of operations at the studio, on the other side of the country. She has them
keeping very close track of the “ hot costs, ” the daily tally of expenses the production incurs.
Reality Show
In contrast to the smooth operation of Blockbuster, Reality Show is having some trouble with
its work. The production of this film is part of a reality television show. The crew mem-
bers on this set are mostly unfamiliar to one another, because they were hired directly
for the series and the heads of the departments did not get to select their own crew.
Moreover, there are many novices on the crew. For example, the director of the film is a
fi rst - timer, chosen by a television audience vote, and knows nobody else on the set.
On this film set, you hear a lot of talking, but it is not about the tasks or the work
on the project. Crew members are very worried about their careers, positioning them-
selves and posturing for the television cameras. “ Why wasn’t I in on that decision? That’s
part of my job, ” gripes one producer to the camera. There are repeated blow- ups on
the set between the newbie director and the cinematographer, who have very different
ideas about the tone of the film, and who continually point fingers at one another and
develop an intense dislike of each other. “ He thinks he ’s an auteur, ” complains the direc-
tor, while the cinematographer rejoins, “ He has no clue what he is doing! ” After a few
days, the cinematographer stops attending the morning meetings, and arrives only as the
crew is ready to begin shooting.
One morning, the cinematographer looks through the camera and says, “ Why wasn’t
that barn wall repainted? It is in the picture! ” The set dressers, who were told by the
director not to paint the wall when the cinematographer was not around, rush over and
begin talking, while everyone else waits. Because key crew members are absent or arguing,
key decisions are delayed. Information that is important also goes missing, causing even
more problems. For instance, for the first three weeks of the shoot the director is not
aware that the lead actor does not know how to ride a motorcycle, even though others
on the set know this. Somehow, this bit of information falls through the cracks. Two days
before the climactic bike chase scene is going to be shot the director talks to the actor
about it and, delaying the shoot even more, the scene has to be pushed off for several days
while they teach him to ride. The project continues to be plagued by these diffi culties, and
ends as a failure.
CONCLUSION
This chapter discussed some of the factors by which groups achieve a great pro cess.
A great group process is one that is responsive, that includes conflict, and where
group members get along. The antecedent conditions that we discussed include sets
of tactics around building collective intuition, stimulating quick conflict, and setting
the pace of the group. We also indicated that the leader has a particularly powerful
influence on the process of the group. Using research on groups, this chapter high-
lights some of the key ways to understand and improve group process. The result of
such improvements can be high - quality and timely outcomes that improve the odds
of the long - term survival of the group and its organization.
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322 GERARDO A. OKHUYSEN AND BETH A. BECHKY
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EXERCISES
Successful vs. unsuccessful groups
Briefl y describe two groups that you have participated in, one that you consider was success-
ful and one that was unsuccessful, explaining the work the groups were trying to accomplish.
After you have described the groups, build a table in which you compare the two groups,
noting similarities and differences in building collective intuition, the presence or absence of
conflict in the group, and how pacing and timing affected the work process. Finally, describe
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325 MAKING GROUP PROCESS WORK
the lessons you can draw from the successful group and describe how, in retrospect, you
might have tried to change the dynamics in the unsuccessful group to improve its work
process.
Improving group process
Describe a group that you are currently participating in where you would like to improve
the group process. After describing the group and its work, indicate how well the group is
performing with regards to building collective intuition, exploiting task conflict, and pac-
ing the work. Which elements of group process do you feel need attention? What benefi ts
do you think you could get from improving them? Lastly, describe in detail the actions that
you can take to change or modify the group process to gain those benefit s .
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18
Manage Intra - team Conflict
through Collaboration
LAURIE R. WEINGART AND KAREN A. JEHN
The basic principle we espouse in this chapter is that intra - team conflict should be man-
aged using collaboration. Intra - team conflict occurs when team members hold discrepant
views or have interpersonal incompatibilities. There has been a debate in organizational
research regarding whether agreement or disagreement within teams is advantageous for
overall performance. While a recent large - scale analysis of prior research on team confl ict
(i.e. a meta - analysis) found that on average, all types of conflict (task and relationship) can
impede team performance (De Dreu and Weingart, 2003 ), conflict researchers have also
found that while relationship conflicts based on personality clashes and interpersonal antag-
onism are detrimental to team performance and morale, task conflicts can be benefi cial if
managed collaboratively (Amason, 1996 ; Ensley and Hmieleski, 2005 ; Jehn, 1995 , 1997 ;
Liang, Liu, Lin, and Lin, 2007 ; Matsuo, 2006 ; Olson, Parayitam, and Bao, 2007 ). Our
central argument is that collaboration can benefit both task and relationship confl ict, but
that task conflict should be actively managed (not necessarily eliminated) through collab-
oration in the work setting whereas relationship conflict should be collaboratively managed
off - line, outside the work setting, (or avoided) to ensure high performance of teams.
Collaboration is a joint endeavor, involving two or more people working together to
complete a task. Collaboration includes teamwork – the coordination of efforts of a group
of people around a stated purpose. It involves constructive discussion among team mem-
bers regarding the common workgroup goal. Different from negotiations (see Chapter 28 ),
where parties often have divergent interests, teamwork, as we address it, is focused on
groups in which members have common goals, thus making collaboration a key compo-
nent to successful team outcomes. When embedded in the culture of an organization, this
can be more than coordination and cooperation, but rather a continuous partnering of
people based on shared values (Haskins, Liedtka, and Rosenblum, 1998 ).
There are three fundamental steps in managing team conflict through collaboration. The
first step is to identify the type of intra - team conflict. The second is to identify appropriate
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328 LAURIE R. WEINGART AND KAREN A. JEHN
collaboration strategies to resolve disputes. We argue that collaboration is a key strategy, but
it needs to be applied differently, depending on the type of dispute. The third step is to culti-
vate conditions that increase the likelihood of collaboration. We address each step below.
IDENTIFYING THE TYPE OF INTRA-TEAM CONFLICT
The first major principle in dealing with intra - team conflict collaboratively is to deter-
mine the type of confl ict. Task conflict involves disagreements among team members on
performance - related activities. Some of these performance - related activities have to do
with the actual task and others have to do with the process of doing the task or delegating
resources and duties.
Task content conflicts are disagreements among group members regarding ideas and opin-
ions about the task being performed, such as disagreement regarding an organization’s
current hiring strategies or determining the information to include in an annual report.
Task content conflicts include debates over facts (driven by data, evidence) or opinions
(De Dreu, Harinck, and Van Vianen, 1999 ). Task process conflicts are about logistical and
delegation issues such as how task accomplishment should proceed in the work unit, who ’s
responsible for what, and how things should be delegated ( Jehn, 1997 ). They are often
about the coordination of the task (e.g. three subtasks need to be completed) or coordi-
nation of the people (e.g. we should meet at 3 pm each day to update; Behfar, Mannix,
Peterson, and Trochim, 2008 ). One important distinction about task conflict is that it
often provides more useful information about the task, the process, or the people involved
and their capabilities (Chapter 17 ). While the debate can be contentious, the differing
views discussed will add to the group ’s overall store of knowledge. Relationship confl ict is
less likely to have this informational advantage (Cronin and Bezrukova, 2006 ).
Relationship conflicts are disagreements and incompatibilities among group members
about personal issues that are not task related. Relationship conflicts frequently reported
are about social events, gossip, clothing preferences, political views and hobbies ( Jehn,
1997 ). Relationship conflicts are characterized by more personal and interpersonal con-
cerns, can be driven by personality differences, and are more likely to affect group main-
tenance functions, such as cohesiveness, but can also interfere with task performance.
Take an R & D team: when the different researchers disagree about data interpretation
and the meaning of the results, they are experiencing task content conflict. If they argue
about who ’s responsible for writing up the final report and who will make the presen-
tation, they are having a task process conflict. Disagreements about the fastest route to
work, automobile gas mileage requirements by the government, politics, religion, and the
intelligence level of anyone who would take the bus (which one member does) are relation-
ship conflicts. Ongoing research on the distinction between task and relationship confl ict
is beginning to separate the content of the relationship confl ict (on - task vs off - task) from
the emotionality and source of that conflict (Cronin and Bezrukova, 2006 ; Jehn, Greer,
Levine, and Szulanski, 2008 ; Weingart, Bear, and Todorova, 2008 ).
Relationship conflicts are characteristically more emotional than task confl icts – and
those emotions tend to be negative ones – frustration, anger, stress (Greer and Jehn, 2007 ).
Behavioral expressions of negative emotions include yelling, crying, banging fi sts, slam-
ming doors, and having an angry tone and, when expressed in this way, are associated
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329 MANAGE INTRA - TEAM CONFLICT THROUGH COLLABORATION
with confl ict escalation. In contrast, a simple acknowledgment of emotion (e.g. “ What you
said about me makes me angry” ; see Chapter 8 ) is less likely to elicit a heated exchange,
but rather a discussion of causes and attempts to repair.
These negative emotions arise because relationship conflicts often involve threats
to people ’ s self - identity or self - esteem – the conflicts are often deeply value laden. For
example, a conflict over whether a woman or minority could make a good US president
taps into deeply held values and can be very personal both to men and women and major-
ity and minority members. When negative emotions run high, collaboration between the
disputants might not be possible. Collaboration requires a high level of interdependence
and willingness to work together. Team members that feel animosity, frustration, anger, or
distrust are not likely to be willing to rely on one another.
In contrast, task conflict tends not to be as deeply rooted in people ’ s value systems.
However, that ’s not to say that task conflict is never emotional. Debates of how to per-
form a task can get very heated – often because both sides believe they are right and have
strong convictions to their opinions (Cronin and Bezrukova, 2006 ; Jehn, 1997 ).
People can also experience positive emotions in response to conflict. Consider a debate
about an organization’s strategy that is stimulating and energizing. Many positive emotions
can accompany those task conflicts – happiness, elation, positive challenge. Ongoing
research suggests that task conflict elicits more active positive emotions (e.g. active, inter-
ested, alert) as compared to other types of emotions (negative emotions and passive, posi-
tive emotions, e.g. content, at ease, quiet), whereas relationship conflict is more likely to
elicit all types of emotions, but passive, positive emotions to a lesser extent.
Two other aspects of conflict that are important to consider are the dynamic nature
of conflict and the different individual perspectives that members have. Confl icts can
transform from task - oriented conflict to more relationship - focused conflicts over time. We
consider this in the section on using collaboration to overcome the escalation of confl ict.
Thus, when considering the type of confl ict, we also need to take into account the context
within which it occurs and the origins of the conflict ( Jehn and Mannix, 2001 ; Greer,
Jehn, and Mannix, 2008 ). For example, what currently appears as an intense interpersonal
conflict could have begun as a series of conflicts over task performance. On the other
hand, relationship conflicts can also be disguised as, or turn into, task conflicts such that
if a member has a personal issue with another member they may sabotage the group by
undermining any opinion or suggestion the other member may have.
In addition, individuals within groups may have different perceptions about the level
or type of conflict in the group ( Jehn and Chatman, 2000 ; Jehn and Rispens, 2008). One
member may perceive that there is a high level of conflict while others may think there is
no problem. This can interfere with the process of resolution as it is difficult to find a col-
laborative solution when there is not even agreement as to whether there is a confl ict or
not. A first step, that we discuss in detail later, is to recognize the differences in perceptions
and communicate openly regarding the existence (or lack) of confl ict within the group.
IDENTIFYING APPROPRIATE COLLABORATION STRATEGIES
We assert that the detrimental effect of relationship conflict can be minimized if collab-
oratively managed outside of the task setting and the benefi cial effect of task confl ict can be
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330 LAURIE R. WEINGART AND KAREN A. JEHN
maximized if collaboratively managed within the task setting. Thus, the appropriate col-
laborative strategy depends on the type of confl ict experienced.
Task conflict
Although task conflict has been shown to have an overall negative impact on team per-
formance (De Dreu and Weingart, 2003 ), it can improve decision quality, strategic plan-
ning, learning, and creativity (Amason and Schweiger, 1994 ; Cosier and Rose, 1977 ;
De Dreu, 2006 ; Jehn and Rupert, 2008 ; see also Chapter 17 ). The cognitive, task - focused
aspect of conflict can enhance the assessment of shared information and deliberate, care-
ful assessment of alternatives. The useful give and take among members, the consult ative
interaction and problem solving, and the increased information exchanged enhance
performance. Avoidance or suppression of conflict has been shown to interfere with
team performance. When members agree with other group members about concepts
or actions without presenting dissenting viewpoints, superior alternatives may be over-
looked and thus performance may be suboptimal (Janis, 1982 ; see also Chapter 25 ).
Putting pressure on dissenters, self - censorship, and collective justifications (all associated
with groupthink) increase defective decision making (Chapter 17 ).
Relationship conflict
While direct collaboration is effective for task conflict, it is less so for relationship confl ict.
Collaboration (or contention) over non - task issues takes much time away from task per-
formance, thus reducing functioning and effectiveness (De Dreu and Weingart, 2003 ;
Murnighan and Conlon, 1991 ). However, collaboration can be used effectively to resolve
many relationship conflicts when engaged offl ine. Offline discussions give team mem-
bers opportunities to discuss relationship conflicts in a more private and personal forum.
Without an audience, disputants should be less likely to posture and more likely to be
open to the other party ’s point of view. Offline discussions can be engaged directly by the
disputants or with the help of others. Sometimes facilitation might be necessary to bring
the disputants together and dampen negative emotions.
However, some relationship conflicts are better avoided. Relationship confl icts that
have their roots in deeply held values and assumptions are often impossible to resolve
in the workplace where activities are primarily task focused. Thus, trying to get at true
underlying interests for relationship conflicts may result in even more intractable disputes,
distracting from task performance and escalating negativity. When relationship confl icts
have a low potential for resolution they are sometimes better to avoid (De Dreu and Van
Vianen, 2001 ; Druckman, 1994 ).
CULTIVATE CONDITIONS THAT PROMOTE COLLABORATION
Collaboration is effective in managing conflict, task or relationship, in that it sets a posi-
tive, team - oriented tone for the group (Mintzberg, Dougherty, Jorgensen, and Westley,
1996 ). However, collaboration doesn’t just happen. Collaboration within teams must
be fostered by promoting a team orientation, composing the team of members who are
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331 MANAGE INTRA - TEAM CONFLICT THROUGH COLLABORATION
motivated to cooperate and think deeply, and reinforcing actions that promote problem
solving (i.e. member behavior). Although we talk about team orientation, team mem-
ber motives, and team member behavior as distinct categories, they are interrelated. For
example, certain team member behaviors (e.g. information exchange) will infl uence a
team orientation (e.g. open communication norms) and vice versa.
Create a team orientation
For a team to be collaborative, its atmosphere must support interdependence, reliance,
respect, trust, open communication, and collective effi cacy (Chapter 10 ). While a team
orientation can be considered a precondition for effective collaboration, it will also
improve as the group experiences successful collaborative events. In this way, norms are
developed which perpetuate interdependence, reliance on, and respect for one another.
Framing. Creating a team orientation refers to framing the group ’s activities as belonging
to the team rather than solely as a set of individual accomplishments. A common group
goal and a superordinate team identity can promote this (see Chapters 9 and 17 ). With a
team orientation, there is a sense that although we are each responsible for our individual
contributions to the group, “ we ” are jointly responsible for the group ’ s final product. Team -
oriented members take personal pride in the team ’s performance and feel personally suc-
cessful when the team is successful.
Team goals. When team goals and individual goals support one another, teams that focus
on a meta - goal or team - goal are more likely to have constructive confl ict management
(Thatcher and Jehn, 1998 ). This is in contrast to the case where individuals focus only on their
own contribution, claiming (or denying) responsibility for the overall group ’s performance.
Develop collective efficacy. Collective efficacy refers to a group ’s shared belief in its capabil-
ities to perform a task (in this case, resolve a conflict) (Bandura, 1997 ; also see Chapter 10 ).
Often what is most important in predicting high performance is that team members feel
they have the capabilities to resolve the task and relationship conflicts at hand ( Jehn et al.,
2008 ). If members feel they, or others in the group, have the capabilities to constructively
manage the confl ict, they will engage in positive discussions with one another relying on the
competence of the group to reach a satisfactory resolution consistent with the group goal.
Collective efficacy is driven both by the team ’s beliefs about its ability to work as a unit
as well as team members ’ beliefs about their own and others ’ capabilities. Self - effi cacy
(held by an individual) can be raised using several mechanisms (Bandura, 1997 ; and, as
noted, see Chapter 10 ), three of which also seem relevant to collective efficacy in teams.
First, collective efficacy can be raised through “ enactive mastery experience, ” in our case,
prior successes at managing similar, challenging conflicts that required effort and persever-
ance to overcome ( Jehn et al., 2008 ). Through experience, team members learn effective
strategies for diagnosing and managing conflict, which increase their confidence for man-
aging future conflicts that might arise. Second, collective efficacy can be raised through
observing and modeling other teams ’ collaboration strategies. Teams that can observe
similar teams ’ inner workings and subsequent performance can use that information as
a comparator to determine where they stand relative to others. They can also learn from
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332 LAURIE R. WEINGART AND KAREN A. JEHN
the other team ’s successes and failures. Third, collective efficacy can be raised via social
persuasion – when others express confi dence in the team ’ s capabilities.
Affective integration. A key component in collaborative approaches to confl ict resolution
is the attitudes members have toward one another. Affective integration is a group - level
concept representing the feelings that team members hold for one another, specifi cally in
terms of their interpersonal trust, respect, and liking (Cronin, Bezrukova, Weingart, and
Tinsley, 2008 ; Weingart, Cronin, Houser, Cagan, and Vogel, 2005 ). These attitudes infl u-
ence the beliefs about and behavioral inclinations members have toward each other. Trust
evokes beliefs that others can be relied upon (Rotter, 1971 ). This is often called trustwor-
thiness, and it leads to the willingness to be confident in another person’ s competence,
integrity, and good will (Chapter 21 ). Respect, on the other hand, evokes beliefs about the
intrinsic value of others and liking implies a general attraction to others (Chaiken, 1987 )
and at the group level this is often conceptualized as cohesion (Festinger, 1950 ).
Affective integration increases the likelihood that team members ’ assets (knowledge,
skills, and abilities or KSAs) are actually used by the team while collaborating. Both trust
and respect play a key role. Trust influences the willingness to share information and
receive information as accurate (Carnevale and Lawler, 1986 ; Kimmel, Pruitt, Magenau,
Konar- Goldband, and Carnevale, 1980 ). Without trust, team members will be unwilling
to rely on the KSAs of others for fear that teammates might not follow through on their
promises or work to undermine teammates ’ interests. Respect is what leads people to a
priori assume potential utility in the ideas of others. People will devote more attention to
these ideas in order to fi nd the value that they assume exists.
Affective integration also buffers against the stresses and strains that often arise as a
result of team conflict. Trust decreases the likelihood that task conflicts will be perceived
as attacking or personal in nature (Simons and Peterson, 2000 ) because of the implied
benevolence in those who are trusted. When people respect each other they take great care
not to violate fairness norms regarding how people should behave toward one another
(Bies and Moag, 1986 ). Respect has been shown to relate to (perceptions of) fair treatment
as well as the inclination to acknowledge others ’ status and dignity (Tyler, Degoey, and
Smith, 1996 ; Tyler and Lind, 1992 ). Finally, liking and its resultant cohesion can serve to
prevent people from withdrawing from each other in the face of confl ict.
Open and constructive conflict communication norms. Collaboration requires norms for the expres-
sion of task - related conflict that support freedom to disagree and to constructively respond.
Conflict communication norms can either be open to a free exchange of concerns and
dissention, discouraging, or avoidant of those exchanges. If group members feel that it is
appropriate and acceptable to discuss their differing opinions, disagreements are more likely
to have a positive effect on group process and performance than if these disagreements are
discouraged or avoided (Lovelace, Shapiro, and Weingart, 2001 ). However, openness must
be accompanied by restraint and respect for others ’ contributions so that conflicts do not
escalate and become more emotional, relationship conflicts. Openness can be communi-
cated by using an inquiry approach to group decision making (Garvin and Roberto, 2001 ),
for example allowing others to make their point without interruption, asking questions to
improve your understanding, and engaging in active listening (i.e. repeating back what
others have said in your own words to ensure that you heard and understood what they said)
(Rogers and Farson, 1979 ). The ideal culture for a group is to have conflict norms that will
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333 MANAGE INTRA - TEAM CONFLICT THROUGH COLLABORATION
allow constructive, open task - related debates but not critical, personal attacks detrimental to
performance.
When task conflict is suppressed, the lines of communication will need to be opened
for collaboration to be successful. Openness and trust must be nurtured within these teams
(Simons and Peterson, 2000 ). Trust must be allowed to develop over time – through posi-
tive experiences group members will grow more comfortable engaging in collaboration.
The team leader can play an important role in setting the norms for open confl ict com-
munication in the team (see Chapters 15 and 21 ). Research shows that teams with leaders
who are rated to be effective experience more constructive conflict, more freedom to
express doubts, and are more innovative (Lovelace et al., 2001 ; Manz, Barstein, Hostager,
and Shapiro, 1989 ; Van de Ven and Chu, 1989 ). In addition, providing the team with the
collaborative skills through training can aid in successful confl ict management.
Identify team members with a propensity to collaborate
A team is more likely to engage in collaboration if its members are inclined to use col-
laboration. A team member ’s propensity to collaborate will be higher when he or she is
motivated to work hard toward improving outcomes for oneself and for other members of
the team. This requires a cooperative orientation (focus on self and others) ( Van Lange,
1999 ) and epistemic motivation (the desire to develop and hold a rich and accurate under-
standing of the world) (Kruglanski, 1989 ). A cooperative orientation provides a focus on
collaboration whereas epistemic motivation provides the drive (De Dreu and Carnevale,
2003 ). Both are needed for groups to be effective; for example, for win – win agreements to
be achieved (De Dreu, Beersma, Stroebe, and Euwema, 2006 ).
Cooperative orientation. Team members who are cooperatively oriented place value on
maximizing outcomes for all team members and tend to engage in more collaboration
as a means to this end (De Dreu, Weingart, and Kwon, 2000 ; Messick and McClintock,
1968 ). People who only care about themselves (individualistically oriented) have less
interest in collaboration (Messick and McClintock, 1968 ). Since people who are solely
interested in their own achievements will have little interest in teamwork, they may be
better off working alone or having their ideas communicated to a group by a third party
(Locke, Tirnauer, Roberson, Goldman, Latham, and Weldon, 2001). This is not to deni-
grate independent thinking which is the basis for constructive conflict (Chapter 17 ) –
without independent thinking within groups (and the confl ict that results), the group easily
lapses into conformity and groupthink (Locke et al., 2001 ).
Cooperative orientations influence quality of agreements through their effect on
group member behavior (De Dreu et al., 2000 ; Weingart, Bennett, and Brett, 1993 ).
Cooperatively motivated team members tend to engage in more integrative/problem -
solving tactics (e.g. truthful information exchange about preferences and priorities, multi -
issue offers, tradeoffs) and fewer contentious tactics (e.g. threats, substantiation of position,
power tactics) than do team members who are only individualistically motivated. Groups
with mainly individualistic members, however, sometimes realize that disinterest in group
collaboration will not allow them to reach an agreement and cooperation is necessary to
reach their own goals (often referred to as “ enlightened self - interest ” ; Rubin, 1991 ), result-
ing in a shift to team problem solving when they hit an impasse and are aware they are
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334 LAURIE R. WEINGART AND KAREN A. JEHN
working with other people like themselves (Schei, Rognes, and De Dreu, 2008 ). As implied
earlier, cooperative groups can become too cooperative, resulting in compromise (giving
in rather than problem solving) and suboptimal agreements. This is most likely to occur
when they do not have a strong reason to resist yielding, for example when they are under
time pressure, have low aspirations, have bad alternatives, or are not accountable to others
(De Dreu et al., 2000 ; Pruitt and Rubin, 1986 ).
To remedy the above, individualistically motivated group members can adopt problem
solving to achieve their goals as a way to avoid impasse and cooperative group members
may adopt more competitive strategies to protect themselves from being dominated by
individualists who do not want to cooperate. However, the latter is more likely (Kelly and
Stahelski, 1970 ). Faced with conflicting member motives, cooperative negotiators have
been shown to become more competitive than individualists are to become more cooper-
ative (Weingart, Brett, Olekalns, and Smith, 2007 ).
Although cooperatives will shift their overall approach toward competition as the number
of individualists increases, they may also attempt to shift the interaction back to cooperation
by strategically interjecting collaborative behaviors. For example, cooperatives who were in
the minority in negotiating groups responded to attempts by individualists to claim value by
providing information that could be used to find mutually beneficial agreements (i.e. inte-
grative information). They also rewarded the individualists for providing integrative infor-
mation by reciprocating with additional integrative information (Weingart et al., 2007 ).
Whereas these orientations (called “ social value orientations ” in the research litera-
ture) are treated as relatively stable individual differences, situational cues can also infl u-
ence one ’s propensity to collaborate. As such, moving a group toward collaboration would
require either changing the composition of the team to all cooperative members (via turn-
over and selection) or providing strong cues about the collaborative nature of the task and
the cooperative motives of others. Team members can be instructed to adopt a cooperative
approach or be incentivized, making cooperation in everyone ’s self - interest. Instructions
from a supervisor or rewards for high joint value agreements have been shown to be effec-
tive. The expectation that team members will continue to interact on cooperative tasks
in the future ( “ expected cooperative future interaction ” ) has also been shown to increase
cooperative motives (De Dreu et al., 2000 ). Finally, team members can adjust their motives
in response to the behaviors of others in the group. Cooperative actions by others can
serve as a signal of willingness to collaborate, but individualistically oriented members also
need assurances that cooperation is in their own self - interest (Locke et al., 2001 ).
Epistemic motives. People with high epistemic motivation have a desire to gain knowledge,
think deeply, and more thoroughly process information. They engage in more deliberative
and systematic processing (De Dreu and Carnevale, 2003 ). In that people with high epis-
temic motivation process information more thoroughly and are more likely to revise their
view of a given situation (De Dreu, Koole, and Steinel, 2000 ), it is likely they would make
strong contributions to collaborative teams.
People with low epistemic motivation are believed to solve problems and make
decisions using heuristic processing, which is relatively quick and effortless. Low epistemic
motivation has been shown to impede the quality of information processing and the col-
laborativeness of group decision making. Research on negotiation shows that low epis-
temic motivation increases reliance on stereotypes and irrelevant anchoring information
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335 MANAGE INTRA - TEAM CONFLICT THROUGH COLLABORATION
(De Dreu et al., 1999 ). Small groups composed of members with a high need for closure
have been found to be less egalitarian in their decision making and more tolerant of an
authoritarian leader (De Grada, Kruglanski, Pierro, and Mannetti, 1999 ), both of which
run counter to collaboration.
Like a cooperative orientation, epistemic motivation is jointly determined by individual
differences and situational cues. People with low epistemic motivation are likely to have
a high need for closure (Webster and Kruglanski, 1994 ). The internal pressure to quickly
complete the task at hand associated with a high need for closure tends to limit the moti-
vation to deeply process information. Similarly, external time pressure has been shown to
limit team members ’ epistemic motivation (De Dreu et al., 1999 ).
To increase the odds that a team includes epistemically motivated members, one could
screen people in terms of their need for closure or for cognition. In addition, epistemic
motivation can be induced by reducing time pressure (reducing the need for closure) or
making them accountable for their process. Process accountability has been shown to
increase epistemic motivation because when people expect to be observed and evaluated
by others regarding the processes they engage they are more likely to use a more thorough
process (Lerner and Tetlock, 1999 ).
Propensity to collaborate as a combination of cooperative orientations and epistemic motives. The two
dimensions, cooperative orientations and epistemic motives , are independent – cooperatives and
individualists can hold high or low epistemic motivation. However, both a cooperative
motive and high epistemic motivation are necessary for team members to effectively col-
laborate (De Dreu et al., 2006 ). Team members who hold the goal of maximizing joint
(individual and group) gain and are motivated to process information thoroughly are most
likely to engage in problem - solving behaviors and succeed in mixed - motive negotiations.
The same should hold in teamwork contexts.
Team member behavior
Collaboration is enacted through group member behavior. Thus it is important to iden-
tify the behaviors that constitute collaboration. Although collaboration differs from nego-
tiation, we can look to the negotiation literature to consider how to manage confl ict in
collaborative settings. The negotiation literature has identifi ed integration of interests as a
collaborative strategic approach for managing conflict (see Chapter 28 ). Integration of
interests includes increasing the availability of resources (thus, “ expanding the pie ” ) as
well as sharing in the distribution of those resources. The literature on integrative negotia-
tion has identified a host of tactics that aid in the identification of opportunities for joint
gain. We focus on three that are central to the process: exchange information, use packag-
ing and tradeoffs, and work to break the chain of confl ict escalation.
Exchange information. A key mechanism for enacting an integrative strategic approach
involves the exchange of accurate information. Exchanging information increases insight
into the other party ’s preferences and priorities and the probability that negotiators will
find integrative agreements, if a zone of agreement exists (Pruitt, 1981 ; Putnam and
Jones, 1982 ). The benefit of sharing information varies depending on the type of infor-
mation that is shared and how it is used. Sharing factual information, like constraints
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336 LAURIE R. WEINGART AND KAREN A. JEHN
or costs, can be used to merely inform the other party (a collaborative application) or to
substantiate one ’s position in an attempt to persuade the other party (a less collaborative
approach). Sharing information about preferences for a given issue (i.e. what you want
and why you should have it your way) can be more confrontational in nature and does not
necessarily improve the quality of an agreement (Weingart, Hyder, and Prietula, 1996 ).
In contrast, exchanging information about priorities across issues (i.e. the relative import-
ance of the issues to a negotiator and why) represents an effective, collaborative type of
information exchange as it involves multiple issues and can facilitate tradeoffs across issues
(Pruitt and Lewis, 1975 ; Thompson, 1991 ).
Use packaging and tradeoffs. It is not uncommon for discussions of multi - issue confl icts to
progress one issue at a time – with the group resolving one issue before moving to the
next. The problem with this approach is that tradeoffs cannot be made across issues.
Tradeoffs occur when both parties make concessions on less important issues (to them-
selves) to gain advantage on another (Pruitt, 1981 ). This tactic is effective at reconciling
interests when parties have differing priorities on issues when each party gains more than
they lose in the tradeoff.
When team members are unwilling to share this information (because they fear the
other party might not reciprocate, putting themselves at an information disadvantage),
effective tradeoffs can be identifi ed by exchanging multi - issue offers (i.e. packaging). When
issues are packaged together, instead of being considered independently and sequentially,
it is easier to arrange trades or concessions as negotiators search for packages that are
mutually beneficial (Thompson, Mannix, and Bazerman, 1988 ; Weingart et al., 1993 ).
Discovering tradeoffs through the exchange of packaged offers is a more indirect method
in that team members must infer other ’s priorities by stated package preferences (Adair,
Weingart, and Brett, 2007 ).
Work to break the chain of conflict escalation. One of the most difficult aspects of a successful
negotiation is trying to balance the cooperative and competitive components of mixed -
motive negotiations (Lax and Sebenius, 1986 ). Once a conflict takes on a competitive
or personal tone (i.e. becomes a relationship conflict), it is very difficult to shift it to a
more cooperative task - focused interaction, as the conflict can escalate into a destructive
cycle. One way to break the chain of contentious behavior is to respond with integra-
tive, collaborative responses (Brett, Shapiro, and Lytle, 1998 ; Putnam and Jones, 1982 ).
Collaboration is then more likely to continue when that collaborative behavior is recip-
rocated than when it is not (Weingart, Prietula, Hyder, and Genovese, 1999 ). Another
method for breaking conflict spirals is explicitly labeling the contentious reciprocation as
unproductive during the interaction. When a conflict is contentious and one party identi-
fies the process as such, the other party would be hesitant to continue in a contentious
manner without appearing irrational. Directly responding to a threat by identifying it
( “Are you threatening me? ” ) demonstrates that the threat was not effective and may cause
the party making the threat to shift tactics or refocus onto the process (Brett et al., 1998 ).
Another component of conflict that encourages a negative escalation cycle is emotion
(see Chapter 8 ). When people begin to take negative comments about their task perfor-
mance or ideas personally, the conflict becomes more emotional and task confl ict can
escalate to become relationship confl ict. Relationship conflict of this type is best handled
by mediation by an outside party to sort through the negative emotions and ascribe more
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337 MANAGE INTRA - TEAM CONFLICT THROUGH COLLABORATION
positive attributions to team members ’ behavior. Another option is that team members
who are not emotionally inflamed might take the disputants off - site, such as into a social
setting for drinks, or a walk, where they can reestablish their interpersonal bonds and
discuss their concerns. If the negative emotions are so inflamed among two members
that they are not willing to talk, we recommend having two members who are closest to
each of the adversaries talk, collaboratively, with each of the parties. Then the two facili-
tators (i.e. 3rd and 4th parties) can talk and try to bring all four together. Finally, a trusted
outsider to the team (e.g. manager or colleague) could help high negative emotion teams
get to the point where they can engage in collaboration and constructive confl ict without
assuming the worst of others. When possible, irrational team members can be replaced.
CASE EXAMPLES
In order to illustrate the use of collaboration in teams, we present two case examples of
team conflict: one managed ineffectively, the other effectively. These examples are com-
pilations of conflicts we have observed in our research on teams in organizations. Both
examples involve task conflict within cross - functional product development teams work-
ing to design a high - quality, low - cost automobile that will meet customers ’ preferences
and desires. These teams are comprised of many parties (including marketing representa-
tives and suppliers), but here we will focus on two central parties – designers and engin-
eers. Each subgroup has its own concerns. The designers are responsible for the brand
image and appearance of the car. The engineers are responsible for the functioning of the
car and its components and have primary responsibility for keeping costs within budget.
Unfortunately, these interests are not always in line with one another.
Dysfunctional cross - functional product development team
Consider a cross - functional product development team designing a subsystem of a new
model of an automobile. This team is responsible for the design of the car ’s interior. They
are at mid stage in the design process. Many decisions have been made about the design
and functionality of the interior. Models have been developed and general layouts for com-
ponents (e.g. the console, instrument panel, etc.) have been determined. Engineering feels it
has worked out most of the major functionality issues and was able to remain within budget,
but just barely. Then design comes in with a change in styling. In order to maintain brand
identity, the shape and flow from the instrument panel to the console needs to change.
Engineering is furious. Implications for this change are large. The changes will require a
redesign of the placement of internal components within the instrument panel and console.
To make these changes will be costly – it will require money that is not there. Design
is indifferent to these concerns – they believe that the aesthetic component is what sells the
car – and their job is to make sure the automobile sends a coherent message to the customer.
Each group sees the problem from its own perspective and neither is willing to give
ground. Engineering tells design, “ It can ’ t be done. ” Design is tired of engineering ’s “ no
can do ” attitude and continues to put pressure on engineering until engineering is will-
ing to “ make it work. ” Several meetings occur in which engineering and design try to
convince the other on the merits of their positions. Arguments get heated, tempers fl are.
Little progress is made. After many heated discussions, a compromise solution is reached
which moves away from the design intent, compromises functionality, and increases cost.
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338 LAURIE R. WEINGART AND KAREN A. JEHN
This conflict can be characterized as a task conflict with low resolution potential (i.e.
team members have low collective efficacy). It involved an important aspect of their task
performance and needed to be resolved, but neither side believed they had the ability to
resolve the confl ict. There was no sense of a shared fate – rather than focus on developing
the best product, each side focused on its own concerns. Conflict norms were more toward
blaming and attacking than listening and building. Negative emotions were evoked. What
transpired was a contentious conflict, pitting “ us ” against “ them, ” resulting in a solution
that neither party was especially happy with. Was there another way out of this confl ict?
What could the team have done to fi nd a better solution?
Collaborative integrated product development ( IPD ) team
Consider another design team working on the same component. This team faces the
same change in styling. But this time, design presents the change in terms of a shared
problem – they take responsibility for the change and are willing to consider its implica-
tions. Engineering is then willing to collaborate with design to try to make the change poss-
ible. The IPD team has a frank discussion about the implications of the change. Design
tries to come up with less expensive and less disruptive ways to change the console and
instrument panel while maintaining design intent. Engineering tries to develop innovative
ways to fit the internal components in the new space. They also start looking for addi-
tional sources of funding for the change from the overall vehicle budget. Some discussions
grow heated, but because frustration is focused on the problem rather than one another,
tension is quickly dispersed. Several potential solutions are developed. A dominant option
emerges which includes a slight design modification that provides adequate space for a key
component and some additional funding is found.
This conflict situation differed in several ways from the previous example. While the
conflict was just as important and difficult to resolve, collective efficacy was high. Both
engineers and designers believed a solution was possible. They viewed themselves as a team
tackling a common problem. As such, members were cooperatively oriented and epistem-
ically motivated to work hard to find a mutually beneficial solution. Conflict norms sup-
ported open information exchange and constructive discussions. Emotions remained under
control (Chapter 8 ). An integrative solution evolved because the entire IPD team “ owned ”
the problem and worked together, collaboratively, to develop a solution. They trusted one
another ’s expertise, motives, and information in a way that allowed them to reach a mutu-
ally satisfactory solution. A team orientation, trust in one another, and a belief that a jointly
beneficial solution was possible motivated the team to search together for a solution. This
search involved sharing information, creativity, some tradeoffs, and an effort to avoid turn-
ing task frustration into personal attacks. In addition to a high - quality agreement, this suc-
cessful conflict resolution process reinforced the team ’s belief in its ability to solve problems
and will make the team more willing to tackle similar problems in the future.
Summary of cases
The fi rst team ’ s conflict was very contentious, plagued by low affective integration and
individualistic orientations – an “ us versus them ” framing of the problem. In contrast,
the collaborative team shared ownership of the problem and developed solutions that
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339 MANAGE INTRA - TEAM CONFLICT THROUGH COLLABORATION
recognized the concerns and interests of all parties involved. The first team was not will-
ing to openly share information nor did they trust the information that was received. The
information exchange that did occur served the purpose of bolstering a priori positions.
In contrast, the collaborative team used information to develop understanding and poten-
tial solutions. Because motives were cooperative, it was easier to trust the information
provided. In addition, they worked hard at processing the information made available to
them, signaling high epistemic motivation. Finally, where the first team was very positional
in making demands ( “ my way is the only way ” ) resulting in a stalemate, the collabor ative
team used creativity and tradeoffs to develop potential solutions. What resulted for the
non - collaborative team was a time - consuming, contentious, and sometimes emotional
and personal conflict and an unsatisfactory solution. The collaborative team was able to
succeed because it managed the conflict by focusing on team goals, exchanging truthful
information, developing trust, and using tradeoffs and creativity to fi nd integrative solu-
tions that satisfi ed both engineering and design’s concerns.
CONCLUSION
The literature on teamwork, negotiation, and conflict provided the foundation for this
chapter. The principles gleaned from this prior research demonstrate that the broad
set of activities associated with collaboration can be used to effectively manage team
conflict. Managing task conflict via collaboration can improve the quality of
team decision making and performance. Collaboration is fostered when there is a
strong team orientation, team members are both cooperatively and epistemically
motivated, and team members engage in problem - solving behaviors. Yet, the man-
agement of conflict is often difficult because negative emotions are easily evoked –
defensiveness, anger, frustration. Collaboration provides a way to focus more objec-
tively on the task at hand and integrate confl icting perspectives.
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EXERCISES
Personal assessment of your team conflict management style
Using the DUTCH scale (De Dreu, Evers, Beersma, Kluwer, and Nauta, 2001 ):
1. Use the scale below to respond to the following items as they describe how you typi-
cally approach conflict within a team. Answer in terms of your general tendencies
across a broad range of situations.
1 Never
2 Once in a while
3 Sometimes
4 Fairly often
5 Very frequently
6 Continually
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344 LAURIE R. WEINGART AND KAREN A. JEHN
When I ’ m involved in a team conflict, I do the following: Your response
Y I give in to other team members ’ wishes.
F I push my own point of view.
P I examine issues until I fi nd a solution that really satisfi es me
and my other team members.
C I strive whenever possible towards a 50 – 50 compromise.
A I avoid differences of opinion as much as possible.
F I search for personal gains.
P I examine ideas from different sides to fi nd a mutually
optimal solution.
C I try to realize a middle - of - the - road solution.
A I avoid a confrontation about our differences.
Y I concur with the other team members.
C I insist we all give in a little.
F I do everything to win.
P I work out a solution that serves my own and others ’ interests
as much as possible.
Y I try to accommodate the other team members.
A I avoid a confrontation about our differences.
C I emphasize that we have to fi nd a compromise solution.
Y I adapt to other team members ’ goals and interests.
F I fi ght for a good outcome for myself.
P I stand up for my own and others ’ goals and concerns.
A I try to make differences loom less severe.
2. Average the scores for the questions that have the same letter preceding them (A, C,
F, P, Y). For example, if you filled out all 5s for Y, your average score for Y is “ 5 ” . Each
average represents your reliance on a specifi c conflict management approach.
3. Identify your dominant conflict management approach and consider the questions
associated with each approach.
A = Avoiding – you tend to avoid conflicts that occur. Ask yourself, “Am I avoiding all con-
flicts (task and relationship)? How is my reliance on avoiding helping or hindering my team ’s
performance? ”
C = Compromise – the higher the score the more likely you are to compromise
when faced with a conflict. While meeting in the middle may seem fair, some-
times you can miss opportunities to find creative solutions that are better than
average for everyone. Ask yourself. “ When will compromise be the most or least effective
way in dealing with my team ’s conflict? ”
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345MANAGE INTRA - TEAM CONFLICT THROUGH COLLABORATION
F = Force – people who score high on forcing like to get their way, regardless of
others ’ concerns. While this might be satisfying to you in the short term, it can
leave other team members feeling resentful and unwilling to work with you in the
future. Ask yourself, “ Under what circumstances do I tend to rely on forcing? What are the typi-
cal repercussions that I face? What alternative approaches are usually available to me? ”
P = Problem - solve – problem - solvers work hard to find solutions that meet the
needs of everyone involved in the conflict. They try to satisfy others without
losing sight of their own interests. Ask yourself, “ How does problem solving best promote
cooperation within a team? What are the costs of using this approach? ”
Y = Yield – a yielding approach is the opposite of forcing. Yielders give in to the
demands of others. This approach may end the conflict, but can leave you
feeling taken advantage of. However, yielding can lead to a strategy of recipro-
cation, that is, “ I ’ll give in now, but you owe me. ” Ask yourself, “ What are the risks
of relying on yielding, especially when you consider that open discussion of alternatives and
respect are critical to group success? ”
4. Break into small groups, ideally groups of people who have worked together before.
Share your scores with one another. Discuss whether others see your confl ict man-
agement approach as determined by this scale. What do they see as your strengths?
Weaknesses?
Conflict analysis
Gather in groups of three people. Each person needs to come prepared to discuss a con-
fl ict situation from their personal work or school experience.
1. Each participant: Come prepared to discuss a conflict situation in which you are
currently or were recently involved on a team at work or at school. Describe who is
involved (no names necessary, just their relationship with you), what the confl ict
is about (describe the nature of the conflict, issues, concerns), where it occurred
(context), when it occurred (how recent, how frequently), how it unfolded (actions
and reactions; how people behave or typically manage the confl ict).
2. Discuss the conflict situation in terms of the principles outlined in this chapter.
Some possible discussion questions are outlined below.
a. What type of confl ict occurred? Task, relationship, or some combination?
b. What was the root cause of the conflict? Was it driven by differences in person-
ality, areas of expertise, culture, etc.?
c. How emotional was the conflict? Were the emotions positive or negative? How
did this infl uence the team ’s ability to understand and manage the confl ict?
d. Did the conflict escalate over time? Did it transform from one type to another?
At what point did the team begin to address the conflict? What impact did that
have on your ability to manage the confl ict?
e. Was everyone in the team equally comfortable in dealing with the confl ict? If
no, how did you deal with people ’s differing comfort levels?
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346 LAURIE R. WEINGART AND KAREN A. JEHN
f. What approach did the team use in managing the conflict? Was it an appropri-
ate approach? Were there alternative ways for doing so?
g. Was the situation ripe for collaboration?
i. Was there a focus on teamwork? Did team members feel prepared to
manage the conflict that arose? Did team members trust and respect one
another? Were the communication norms open?
ii. Describe the motives of team members. What were the team members ’
primary motivations regarding cooperation? Were members epistemically
motivated?
iii. Did team members engage in effective confl ict management behaviors?
h. Did the confl ict help or hinder the team ’s performance? Why and how?
i. What role did you play in the confl ict? Did you help or hinder its resolution?
What were your strengths in handling the situation? What could you do to
improve your ability to collaborate through confl ict situations?
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Part VI
LEADERSHIP
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19
Use Power Effectively
to Infl uence People
GARY YUKL
One of the most important determinants of managerial effectiveness is success in infl uenc-
ing people. Effective managers influence subordinates to perform the work effectively,
they influence peers to provide support and assistance, and they influence superiors to
provide resources and approval of necessary changes. The concept of “ power ” has been
very useful for understanding how people are able to influence each other in organizations
(Mintzberg, 1983 ; Pfeffer, 1981 , 1992 ). Power is usually defined as the capacity to infl uence
people and events (Yukl, 2006 ). It is a flexible concept that can be used in many different
ways. For example, power has been used to explain the influence of groups on organization
decisions, and the influence of one organization on another. In this chapter the focus is on the
potential of one individual (called the “ agent ” ) to influence the behavior and attitudes of
other individuals (called “ target persons ” ) in the same organization.
An agent will have more power over some people than over others and more infl uence
for some types of issues than for others. Power is a dynamic variable that changes as con-
ditions change. A person’s power can increase or decrease dramatically over a relatively
short period of time. Moreover, there are different types of power, and an agent may have
more of some types than of others. This chapter will identify different types of individual
power and describe effective ways to exercise each type.
The manner in which power is enacted usually involves influence behavior by the agent.
Specific types of influence behavior are called influence tactics. This chapter will examine sev-
eral influence tactics commonly used in organizations. The relative effectiveness of the various
influence tactics will be described and the conditions for their successful use will be identifi ed.
TYPES OF POWER
Behavioral scientists usually differentiate between position power and personal power.
Position power is potential influence derived from one ’s position in the organization.
This type of power is usually specified and limited by organizational policies, formal
c19.indd 350 6/17/09 7:38:33 PM
350 G ARY YUKL
reward systems, legal constraints, and union contracts. Four specific types of position
power are legitimate authority, reward power, coercive power, and information power
(French and Raven, 1959 ; Yukl and Falbe, 1991 ). Personal power is potential infl uence
derived from agent characteristics. Two specific types of personal power are expert
power and referent power.
The research on power and influence is too limited to provide clear and unequivocal
guidelines on the best way to exercise each type of power. Nevertheless, by drawing upon
a diverse literature in the social sciences that includes research on power, leader behav-
ior, motivation, communication, counseling, supervision, and conflict resolution, it is poss-
ible to develop some tentative guidelines. This section of the chapter will describe specifi c
types of power and the conditions for exercising each type of power effectively.
Legitimate power
Legitimate power is derived from authority, which is the perceived right of the agent to
infl uence specified aspects of the target person’s behavior. The underlying basis for legiti-
mate power is the agreement by members of an organization to comply with rules and
legitimate requests in return for the benefits of membership (March and Simon, 1958 ).
The conditions for continued membership may be set forth in a formal, legal contract,
but the agreement to comply with legitimate authority is usually an implicit mutual under-
standing. Legitimate power is strengthened by an internalized value among people that it
is proper to obey authority fi gures, show respect for the law, and follow tradition.
The amount of legitimate power reflects the chain of command and is usually much
stronger in relation to subordinates than in relation to peers, superiors, or outsiders.
However, even when the agent has no direct authority over a target person (e.g. a peer),
the agent may have the legitimate right to make requests for necessary information, sup-
plies, support services, technical advice, and assistance in carrying out inter- related tasks.
The scope of authority for a position occupant is often specified in writing by documents
(e.g. the job description, the employment contract, organization bylaws), but even when
such documentation exists, there usually remains considerable ambiguity about an indi-
vidual ’s scope of authority (Davis, 1968 ).
Authority is usually exercised by making a request or command orally or in writing.
A polite request is more effective than an arrogant demand, because it does not emphasize
a status gap or imply target dependence on the agent. Use of a polite request is especially
important for people who are likely to be sensitive about status differentials and authority
relationships, such as someone who is older than the agent or who is a peer rather than a
direct subordinate.
Making a polite request does not imply that the agent should plead or appear apolo-
getic about the request. To do so risks the impression that the request is not worthy or
legitimate, and it may give the impression that compliance is not really expected (Sayles,
1979 ). A legitimate request should be made in a fi rm, confident manner. In an emergency
situation, it is more important to be assertive than polite. A direct order by a leader in
a command tone of voice is sometimes necessary to shock subordinates into immediate
action in an emergency. In this type of situation, subordinates associate confi dent, fi rm
direction with expertise as well as authority (Mulder, Ritsema van Eck, and de Jong, 1970 ).
To express doubts or appear confused risks the loss of infl uence over subordinates.
c19.indd 351 6/17/09 7:38:33 PM
351 USE POWER EFFECTIVELY TO INFLUENCE PEOPLE
Compliance with a request is more likely if it is perceived to be within the agent ’s
scope of authority. A request that appears to be illegitimate is likely to be ignored or other-
wise resisted, especially if the requested activity is also tedious, dangerous, or unpleasant.
The issue of legitimacy is likely to be raised for unusual requests and for requests made to
people over whom the agent has no direct authority. If there is any doubt about the right
to make a request, its legitimacy should be verifi ed by the agent.
Reward power
Reward power involves control over desirable resources and rewards. This type of power
is greatest when the target is highly dependent on the agent for attaining the reward and
cannot get it any other way. Reward power stems in part from formal authority. The
authority to allocate rewards to others varies greatly across organizations and from one
type of position to another within the same organization. The higher a person’s position
in the authority hierarchy of the organization, the more control over scarce resources the
person is likely to have. Reward power over subordinates is usually much stronger than
reward power over peers or superiors.
One form of reward power over subordinates is influence over their compensation, ben-
efits, and career progress. Most managers are authorized to give pay increases, bonuses, or
other economic incentives to deserving subordinates. Reward power is derived also from
control over other tangible benefits such as a promotion, a better job, a better work sched-
ule, a larger operating budget, a larger expense account, formal recognition (e.g. awards,
commendations), and status symbols such as a larger office or a reserved parking space.
Reward power is also a source of influence over peers who depend on the agent for
resources, funds, information, or assistance not otherwise provided by the formal author-
ity system. Trading of favors needed to accomplish task objectives is a common form of
influence among peers in organizations, and research indicates that it is important for the
success of middle managers (Cohen and Bradford, 1989; Kaplan, 1984 ; Kotter, 1985 ).
Access to a powerful person inside or outside the organization also provides an oppor-
tunity for an agent to seek favors for others who lack such access, thereby increasing the
agent ’ s reward power.
Upward reward power of subordinates is very limited in most organizations. Subordinates
seldom have any direct influence over the reputation and career of their boss, unless the
organization relies on ratings by subordinates to evaluate its managers. Nevertheless, subordi-
nates usually have some indirect infl uence. If they perform well and speak favorably about
the boss, his or her reputation will be enhanced (Mechanic, 1962 ). Occasionally subordinates
also have reward power based on their ability to acquire resources outside of the formal
authority system of the organization. For example, a department chairperson in a state
university was able to obtain discretionary funds from grants and contracts, and these funds
were used as a basis for influencing the decisions made by the college dean, whose own
discretionary funds were very limited.
Reward power is most commonly exercised with an explicit or implicit promise to give
the target person something under the agent ’s control for carrying out a request or per-
forming a task. Compliance is most likely if the reward is something valued by the target
person, and the agent is perceived as a credible source of the reward. Thus, it is essential
to determine what rewards are valued by the people one wants to infl uence, and agent
c19.indd 352 6/17/09 7:38:33 PM
352 G ARY YUKL
credibility should not be risked by making unrealistic promises or failing to deliver on a
promise after compliance occurs.
Even when the conditions are favorable for using rewards, they are more likely to result
in compliance rather than commitment. A promised reward is unlikely to motivate some-
one to put forth extra effort beyond what is required to complete the task. The target
person may be tempted to neglect aspects of the task not included in the specifi cation of
performance criteria or aspects not easily monitored by the agent.
Rewards may result in resistance rather than compliance if used in a manipulative man-
ner. The power to give or withhold rewards may cause resentment among people who dislike
being dependent on the whims of a powerful authority figure, or who believe that the agent is
manipulating them to his or her own advantage. Even when the reward is attractive, resistance
may occur if the reward is seen as a bribe to get the target person to do something improper
or unethical.
Coercive power
Another related source of power is control over punishments and the capacity to prevent
someone from obtaining desired rewards. Compliance is motivated primarily by fear and
is more likely if the agent is perceived as willing and able to punish the target person. The
formal authority system of an organization usually specifies the legitimate use of punish-
ment, which varies greatly across different types of organizations.
Coercive power is usually much greater in relation to subordinates than in relation to
peers or superiors. Coercive power is derived from the authority of a manager to punish
subordinates for violation of rules and policies, or failure to comply with legitimate orders
and requests. Many different forms of punishment may be available, including dismissal,
suspension, demotion, reassignment to a less desirable job, or a decrease in pay or ben-
efi ts. However, the use of coercive power over subordinates is limited by the counterpower
subordinates have over their leader. When leaders are tempted to use coercion on a large
scale against followers, it undermines their authority and creates a hostile opposition seek-
ing to restrict their power or remove them from offi ce (Blau, 1956 ).
Opportunities for coercion of peers are usually very limited. A person can threaten to
withhold future cooperation or complain to the superior of a peer who refuses to carry
out legitimate requests. Sometimes a manager of one subunit has the authority to reject
the products or plans of another subunit, and this authority also provides some coercive
power. However, since mutual dependencies usually exist in lateral relations between man-
agers of different subunits, coercion is likely to elicit retaliation and escalate into a confl ict
that benefi ts neither party.
Upward coercive power is also very limited in most organizations, but subordinates
often have more of this type of counterpower than they realize. It is possible for them to
damage the reputation of the boss by restricting production, sabotaging operations, initiat-
ing grievances, holding demonstrations, or making complaints to higher management
(Mechanic, 1962 ). In organizations with elected leaders, if enough subordinates want to
remove a leader from offi ce, they usually have suffi cient power to do so.
Coercive power is invoked by a threat or warning that the target person will suffer
undesirable consequences for non - compliance with a request, rule, or policy. The threat
may be explicit, or it may be only a hint that the person will be sorry for failing to do
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353 USE POWER EFFECTIVELY TO INFLUENCE PEOPLE
what the agent wants. The likelihood of compliance is greatest when the threat is per-
ceived to be credible, and the target person strongly desires to avoid the threatened pun-
ishment. Sometimes it is necessary to establish credibility by demonstrating the ability to
cause unpleasant consequences for the target person. However, even a credible threat may
be unsuccessful if the target person refuses to be intimidated or believes that a way can be
found to avoid compliance without being detected by the agent.
It is best to avoid using coercion except when absolutely necessary, because it is dif-
fi cult to use and likely to result in undesirable side effects. Coercion often arouses anger or
resentment, and it may result in retaliation. In work organizations, the most appropriate
use of coercion is to deter behavior detrimental to the organization, such as illegal activ-
ities, theft, violation of safety rules, reckless acts that endanger others, and direct disobedi-
ence of legitimate requests. Coercion is not likely to result in commitment, but when used
skillfully in an appropriate situation, there is a reasonably good chance that it will result in
compliance.
Control over information
Access to information and control over its distribution provide another source of power in
organizations. Some positions are strategically located in the communication network of
an organization, and such positions can provide exclusive access to vital information and
control over its distribution (Pfeffer, 1981 ).
Control over information makes it easier to interpret events for people in a way that
serves the agent ’s interests. It is easier to cover up mistakes and poor decisions, or to delay
their discovery. The impression of agent expertise can be heightened by exaggerated
reports of successful performance. People in leadership positions often have suffi cient con-
trol over the distribution of information to keep subordinates dependent and make it dif-
fi cult for them to challenge the leader ’ s decisions.
Control over the upward flow of information can be used to influence decisions made
by superiors (Mechanic, 1962 ; Pettigrew, 1972 ). The agent supplies information that biases
the target ’s perception of the problem and evaluation of alternatives. For example, a
manager was able to influence the selection of a computer by systematically providing
the board of directors with information that favored one option and discredited others
(Pettigrew, 1972 ).
Information power is also available in a boundary - role position in which a person has
primary responsibility for dealing with outsiders who are important for the continued
prosperity and survival of the organization. For example, when consumer preferences are
changing rapidly, a person who has the contacts with key customers is likely to have con-
siderable information power in the organization.
Expert power
Expert power is perceived expertise in solving problems and performing task activities
(French and Raven, 1959 ). This type of power can be acquired by demonstrating compe-
tence, such as by making decisions or initiating changes that prove successful, or by giving
advice or making predictions that prove to be correct. Expertise is a source of power only
if others are dependent on the person for advice and assistance. The more important a
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354 G ARY YUKL
problem is to the target person, the greater the power derived by the agent from pos-
sessing the necessary expertise to solve it. Dependency is increased when the target per-
son cannot easily find another source of advice besides the agent (Hickson, Hinings, Lee,
Schneck, and Pennings, 1971 ; Patchen, 1974 ).
Expert power depends to a large extent on the perception of others that the agent
has unique expertise to solve important problems for them. Sometimes people overesti-
mate the agent ’s expertise, and the agent gains more power than is warranted. Sometimes
expert power generalizes beyond the specific type of problem or task for which the person
has special skills or knowledge. For example, a person who is skilled in conducting market
surveys may also be considered an expert in designing new products, even though this per-
son actually has little technical skill in product design. In the short run, perceived expertise
is more important than real expertise, and some people are able to gain infl uence from
pretending to have special expertise. However, over time, as the agent ’s knowledge is put
to the test, target perceptions of the agent ’s expertise are likely to become more accurate.
When the agent has a lot of expert power and is trusted as a reliable source of infor-
mation and advice, the target person may carry out a request without much explanation
of the reasons for it. An example is an investor who purchases stocks recommended by a
financial consultant without knowing much about the companies that issued the stocks. It
is rare to possess this much expert power. In most cases, the agent must support a proposal
or request by making logical arguments and presenting evidence that appears credible.
Successful influence depends on the leader ’s credibility and persuasive communication
skills in addition to technical knowledge and analytical ability. Proposals or requests should
be made in a clear, confident manner, and the agent should avoid making contradictory
statements or vacillating between inconsistent positions.
Expert power is based on a knowledge differential between the agent and the target
person, but the very existence of such a differential can cause problems if the agent is not
careful about the way expert power is exercised. An agent who flaunts his or her expertise
may elicit resistance, especially if the target person is a peer or superior in the organiz-
ation. In the process of presenting rational arguments, some people lecture in an arrogant,
condescending manner, thereby conveying the impression that the listener is ignorant.
In their efforts to sell a proposal, some people fire a steady stream of arguments, rudely
interrupting any attempted replies and dismissing any objections or concerns without
serious consideration. Even when the agent is acknowledged to have more expertise, the
target person usually has some relevant information, ideas, and concerns that should be
considered.
Referent power
Referent power is derived from the desire of others to please an agent toward whom
they have strong feelings of affection, admiration, and loyalty (French and Raven, 1959 ).
People are usually willing to do special favors for a friend, and they are more likely to
carry out requests made by someone they greatly admire. The strongest form of referent
power involves the influence process called personal identification. A person who identifi es
with an agent is usually willing to make great sacrifices to gain and maintain the agent ’ s
approval and acceptance. The target person is likely to do what the agent asks, imitate the
agent ’s behavior, and develop attitudes similar to those expressed by the agent.
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355 USE POWER EFFECTIVELY TO INFLUENCE PEOPLE
Referent power is usually greater for someone who is friendly, attractive, charming,
and trustworthy. This type of power is increased by showing concern for the needs and
feelings of others, demonstrating trust and respect, and treating people fairly. However,
to achieve and maintain strong referent power usually requires more than just fl attery,
favors, and charm. Referent power ultimately depends on the agent ’s character and
integrity. Over time, actions speak louder than words, and someone who tries to appear
friendly but manipulates and exploits people will lose referent power. Integrity is dem-
onstrated by being truthful, expressing a consistent set of values, acting in a way that
is consistent with one ’s espoused values, taking personal risks to promote and defend
important values, and carrying out promises and agreements.
Referent power is an important source of influence over subordinates, peers, and
superiors, but it has limitations. A request based solely on referent power should be com-
mensurate with the extent of the target person’s loyalty and friendship toward the leader.
Some things are simply too much to ask, given the nature of the relationship. When
requests are extreme or made too frequently, the target person may feel exploited. The
result of such behavior may be to undermine the relationship and reduce the agent ’s
referent power.
Strong referent power will tend to increase the agent ’s influence over the target person
even without any explicit effort by the agent to invoke this power. When there is a strong
bond of love or friendship, it may be suffi cient merely to ask the target person to do some-
thing. When referent power is not this strong, it may be necessary to invoke the salience
of the relationship by making a personal appeal (an influence tactic described later in this
chapter).
Another way to exercise referent power is through “ role modeling. ” A person who is
well liked and admired can have considerable influence over others by setting an example
of proper and desirable behavior for them to imitate. When identification is strong, imi-
tation is likely to occur even without any conscious intention by the agent. Because people
also imitate undesirable behavior in someone they admire, it is important to be aware of
the examples one sets.
POWER AND EFFECTIVE LEADERSHIP
Research shows that power is related to leadership effectiveness in complex ways.
Effective leaders develop a considerable amount of expert and referent power, and they
rely more on this personal power than on position power to influence people (Yukl, 2006 ).
Nevertheless, some position power is usually necessary to accomplish the work. Without
sufficient authority to reward competent subordinates, make necessary changes, and
punish chronic troublemakers, it is difficult to develop a high - performing group or
organization.
How much position and personal power is necessary will depend in part on what one
seeks to accomplish. More power is needed to implement major changes in an organiz-
ation, especially when there is strong opposition to change. In this difficult situation, a
leader needs sufficient personal power to convince people that change is desirable, and
suffi cient position power to overcome the opposition and buy time to demonstrate that the
proposed changes are feasible and effective.
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356 G ARY YUKL
Although some position power is needed by leaders to carry out their responsibilities,
a person who has a great deal of position power may be tempted to rely on it too much
instead of making an effort to develop and use expert and referent power. The notion that
power corrupts is especially relevant for position power. Leaders with strong position power
are more likely to perceive subordinates as objects of manipulation, devalue their worth,
maintain more social distance from them, use rewards and punishments more often, and
attribute the cause of subordinate achievements to the leader ’s power rather than to the
intrinsic motivation and voluntary efforts of subordinates (Kipnis, 1974 ). Thus, a moderate
amount of position power is probably optimal in most situations, rather than too much or
too little (Yukl, 2006 ).
Extreme amounts of personal power can also corrupt a person. A leader with substan-
tial expert and referent power may be tempted to act in ways that will eventually lead to
failure (McClelland, 1975 ; Zaleznik, 1970 ). Surrounded by adoring supporters, a leader
may begin to believe that he or she has a monopoly on wisdom and expertise. Thus,
although it is desirable for a leader to develop strong personal power, it is also desirable for
followers to retain some influence over key decisions. Effective leaders create relationships
in which they have strong influence over subordinates but are also receptive to infl uence
from them. These leaders consult with subordinates and encourage them to participate in
making important decisions for the work unit.
EXERCISING POWER
Up to now the discussion has involved the different sources of power and how they are rel-
evant for effective leadership. However, when describing the actual exercise of power, it is
usually more meaningful to focus on specifi c influence attempts. The success of an infl uence
attempt is a matter of degree, but it is helpful to differentiate among three levels of success.
Commitment means the person is enthusiastic about the request and makes a maximum
effort to do it effectively. Compliance means that the person is indifferent about the request
and makes only a minimum effort. Resistance means the person is opposed to carrying out
the request and tries to avoid doing it. Commitment is desirable for requests that require the
person to take initiative in dealing with problems and to be persistent in the face of setbacks
and difficulties. Compliance is often sufficient for a simple, routine type of request.
As noted earlier, a common form of influence behavior in organizations is to make a
“ simple request ” based on legitimate power. This form of influence is most likely to be
successful if the request is reasonable, it is clearly relevant for the mission of the agent ’s
work unit, it is something the target person knows how to do, and it does not jeopard-
ize the target person’s own job performance. However, even when a simple request is
perceived to be legitimate, it often results in subordinate compliance rather than com-
mitment. When the request involves actions perceived by the target to be unpleasant,
unnecessary, or detrimental, the reaction to a simple request is likely to be resistance.
Specifi c influence tactics are usually necessary to gain commitment for requests not
initially considered by the target person to be important and feasible. Over the past quar-
ter century, several researchers have attempted to identify distinct types of infl uence tactics
used by individuals in organizations (e.g. Kipnis, Schmidt, and Wilkinson, 1980 ; Schilit
and Locke, 1982 ; Yukl and Tracey, 1992 ). It is useful to differentiate among broad cate-
gories of infl uence tactics that have different objectives (Yukl, 2006 ).
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357USE POWER EFFECTIVELY TO INFLUENCE PEOPLE
Proactive influence tactics include attempts to gain compliance or commitment to a
request or proposal, and specific types of proactive tactics will be described in the next
section of this chapter. Most proactive tactics are also useful to resist or modify infl u-
ence attempts by others. Impression management tactics involve attempts to infl uence
how the agent is perceived by the target, and the objective may be to increase the target
person’s respect and appreciation of the agent. Examples include showing respect and
deference, providing praise, agreeing with the target person, describing your talents and achieve-
ments, and acting in highly visible ways that indicate competence and dedication
(e.g. working late, doing extra work). Finally, political tactics include attempts to infl uence
strategic decisions about objectives, the distribution of scarce resources, and the selection
of people to positions of high power and authority.
Proactive influence tactics
Research by Yukl and his colleagues ( Yukl, 2006 ; Yukl, Seifert, and Chavez, 2008) iden-
tified 11 proactive influence tactics that are relevant for understanding effective infl uence
in organizations. Each tactic will be explained briefly, and the conditions favoring its use
will be described.
Rational persuasion. Rational persuasion involves the use of logical arguments and factual
evidence that a proposal or request is important and feasible. In the most common
form of rational persuasion, the agent emphasizes the potential benefits for the organiz-
ation, team, or mission. This form of rational persuasion is appropriate when the target
person shares the same task objectives as the agent but does not recognize that the agent ’s
proposal is the best way to attain the objectives. On the other hand, if the agent and tar-
get person have incompatible objectives, this type of rational persuasion is unlikely to be
successful for obtaining commitment or even compliance. Thus, it is useful to ensure that
there are shared objectives before using this infl uence tactic.
An agent ’s technical knowledge is the source of facts and arguments used to build a
persuasive case. However, in addition to facts and evidence, a persuasive case usually
includes some opinions or inferences that the agent asks others to accept at face value
because there is insuffi cient evidence to verify them. Thus, infl uence derived from rational
persuasion is greater when the agent is perceived to be credible and trustworthy. Expert
power, information power, and referent power can all enhance the effectiveness of ration-
al persuasion. Finally, an agent needs considerable skill in persuasive speaking to present a
case in a way that will have the maximum possible infl uence.
Apprising. Apprising is the use of information and logic to emphasize the benefits of a
request or proposal for the target person as an individual. The agent may explain how
a request will further the target person’s career, improve the person’s skills, or make the per-
son’s job easier. Unlike rational persuasion, there is not necessarily a shared objective to use
as the basis for an appeal. Unlike exchange, the agent is not offering to give the target some-
thing, but is only pointing out that a proposed course of action will help get the target person
something he or she wants. For apprising to be effective, the agent must be a credible
source of information about potential benefits not already known to the target person.
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358 G ARY YUKL
Inspirational appeals. An inspirational appeal is an attempt to develop enthusiasm and
commitment by arousing strong emotions and linking a request or proposal to the target
person’s needs, values, hopes, and ideals. Some possible bases for appeal include the tar-
get person’s desire to be important, to feel useful, to accomplish something worthwhile, to
make an important contribution, to perform an exceptional feat, to be a member of the
best team, or to participate in an exciting effort to make things better. Some ideals that
may be the basis for an inspirational appeal include patriotism, loyalty, liberty, freedom,
self - fulfillment, justice, fairness, equality, love, tolerance, excellence, humanitarianism,
and progress. For example, employees are asked to work extra hours on a special project
because it may save many lives.
Inspirational appeals vary in complexity, from a brief explanation of the ideologi-
cal justification for a proposed project or change, to a major speech that articulates an
appealing vision of what the organization could accomplish or become. The complexity
of an inspirational appeal depends in part on the size of the task to be undertaken, the
amount of effort and risk involved, and the extent to which people are asked to deviate
from established, traditional ways of doing things. To formulate an appropriate appeal,
the agent must have insight into the values, hopes, and fears of the person or group to be
influenced. The effectiveness of an inspirational appeal also depends on the agent ’ s com-
munication skills, such as the ability to use vivid imagery and metaphors, manipulate sym-
bols, and employ voice and gestures to generate enthusiasm and excitement.
Consultation. Consultation is an attempt to increase the target person’s commitment to
carry a request or support a proposal by involving the person in determining how it will
be done. Consultation can take a variety of forms when used as an influence tactic. For
example, the agent may present a detailed policy, plan, or procedure to a target person
who will be involved in implementing it to see if the person has any doubts, concerns, or
suggestions about it. In the discussion that follows, which is really a form of nego tiation
and joint problem solving, the agent tries to find ways to modify the request so that it
takes into account the target person’s suggestions and concerns. In another variation of
consultation, the agent presents a general strategy or objective to the target person rather
than a detailed proposal and asks the person to help plan how to attain the objective or to
suggest specific action steps for implementing the strategy. The suggested action steps are
discussed until there is agreement by both parties. For consultation to be feasible, the tar-
get person must have at least moderate agreement with the objective that the agent wants
to attain. The target person will not be very enthusiastic about suggesting ways to attain
an objective that is undesirable.
Exchange tactics. Exchange tactics involve an offer by the agent to reward the target
person for doing what the agent requests. The essential condition for use of exchange
tactics is control over rewards that are attractive to the person. In addition, the agent
must be perceived as trustworthy enough to actually provide the promised rewards. Thus,
exchange tactics are facilitated by the agent ’s reward power and credibility. Use of an
incentive is especially appropriate when the target person is indifferent or reluctant about
complying with a request. In effect, the agent offers to make it worthwhile to comply by
promising to provide a reward that is desired by the target person. The reward offered
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359 USE POWER EFFECTIVELY TO INFLUENCE PEOPLE
by the agent may take many forms, such as recommending a pay increase or promotion
for the person, sharing scarce resources with the person, helping the person do another
task, providing information, providing political support on some issue or proposal, putting
in a good word to help advance the person’s career, and offering to share some of the
benefi ts obtained from a project or activity. Sometimes the promise may be implicit rather
than explicit. That is, the agent may suggest returning the favor in some unspecifi ed way
at a future time.
Collaboration. Collaboration involves an offer by the agent to provide necessary
resources or assistance if the target person will carry out a request or approve a proposal.
Examples include offering to show the target person how to do a requested task, offering
to provide the equipment or technical assistance needed to perform a requested task, and
offering to help the target person deal with a problem that would be caused by carry-
ing out the request. Whereas exchange usually involves an impersonal trade of unrelated
bene fits, collaboration usually involves a joint effort to accomplish the same task or objec-
tive. It is a way to communicate that the agent considers the request important, and it also
shows consideration for the target person’s difficulties in carrying out the request. This
tactic is most useful when the agent understands the obstacles faced by the target person
in carrying out a request and also has sufficient expertise and resources to help the target
overcome these obstacles.
Personal appeals. A personal appeal involves asking someone to do a favor based on friend-
ship or loyalty to the agent. This tactic is one way to enact referent power, although when
referent power is very strong, a personal appeal may not be necessary. If considerable effort
is required to comply with a request, the target person should understand that the request is
indeed important to the agent. If a request is not perceived to be important to the agent, it
may be ignored or carried out with only a minimal effort. Thus, whenever appropriate, the
importance of the request to the agent should be explained to the target person.
Personal appeals can take several forms. One form is to ask the target person to carry
out a request or support a proposal as a personal favor. Another form is to emphasize the
close relationship between agent and target before asking for something. A third form is
to say that you need to ask for a favor before saying what it is. If the target person agrees,
then it will be awkward to say no when the request is explained. The risk with this form
of personal appeal is that the target person may feel resentment if manipulated into doing
something unpleasant.
Ingratiation tactics. Ingratiation is behavior that makes a target person feel accepted and
appreciated by the agent. Examples include giving compliments, showing respect, and act-
ing especially friendly and helpful before making a request. Ingratiation can be used not
only for an immediate influence attempt, but also as a longer- term strategy to improve
relationships with people and gain more referent power (Liden and Mitchell, 1988 ; Wayne and
Ferris, 1990 ). An especially effective form of ingratiation for a proactive infl uence
attempt is to explain why the target person is uniquely qualified to carry out a diffi cult
request. When ingratiation tactics are sincere, they can strengthen a friendship, increase
referent power, and make a target person more willing to consider a request. However, if
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360 G ARY YUKL
the target person perceives that the agent is being insincere and manipulative, then ingra-
tiation will not increase compliance.
Legitimating tactics. When authority is ambiguous or legitimacy is in doubt, an agent
may use a legitimating tactic to establish the legitimacy of a request or command.
Examples of legitimating tactics include providing evidence of prior precedent, showing
consistency with organizational policies and rules, reminding the target that the request is
consistent with a prior contract or agreement, and showing consistency with professional
role expectations. Another legitimating tactic is to indicate that the request was approved
by higher management or someone else with proper authority. Sometimes the legitimacy
of a request or command can be verified by documentation such as written rules, policies,
charters, contracts, plans, job descriptions, work orders, or memos from authority fi gures.
Pressure tactics . Pressure tactics include threats, warnings, demands, repeated requests,
and frequent checking to see if the person has complied with a request. This tactic can
take many forms and can vary from being relatively hard (strongly worded threat about
harsh punishment for non - compliance) to being relatively soft (a causal reminder that the
deadline is approaching for a task the target person agreed to do). Sometimes when a
request has been ignored, an angry complaint to the person is sufficient to invoke the poss-
ibility of unpleasant consequences and induce compliance, particularly if the person is
just lazy or apathetic rather than strongly opposed to the action. Sometimes explicit warn-
ings or threats are necessary to get compliance with legitimate requests or rules that are
unpopular.
The hard pressure tactics require some coercive power over the target person, and they
are more likely to result in compliance if the target person believes the agent is able and
willing to carry out threats of punishment. A limitation of most pressure tactics is that
they may have serious side effects. Threats and intimidation are likely to undermine work-
ing relationships and may lead to resistance, avoidance, or retaliation by the target person.
For this reason, pressure tactics should not be used except as a last resort when other infl u-
ence tactics have failed.
Coalition tactics. Coalitions are an indirect type of influence tactic wherein the agent gets
assistance from other people to influence the target person. The coalition partners may
include peers, subordinates, superiors, or outsiders (e.g. clients and suppliers).
One form of coalition tactic is to have other people talk to the target person and
express support for the agent ’s request or proposal. Another form of coalition tactic is for
the agent to bring to a meeting someone who will help to present a proposal to the target
person. A third form of coalition tactic is to use the prior endorsement of coalition part-
ners as a basis for making a stronger appeal to the target person. The appropriate form
of coalition depends on the nature of the request, the agent – target relationship, and the
amount of resistance expected or encountered.
Coalition tactics are always used in combination with one or more of the direct infl u-
ence tactics. For example, the agent and a coalition partner may both use rational persua-
sion to influence the target person. The tactics used by coalition partners are not always
the same one used by the agent. For example, in a version of the “ good cop – bad cop ”
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361 USE POWER EFFECTIVELY TO INFLUENCE PEOPLE
strategy, the agent uses ingratiation and rational persuasion, and the coalition partner uses
pressure.
When the agent gets assistance from a superior of the target (who may or may not also
be the agent ’s boss), this coalition tactic is sometimes called an “ upward appeal. ” Upward
appeals are used primarily as a last resort when repeated attempts to influence the target
person with other tactics are unsuccessful. The target person for an upward appeal is usu-
ally a peer, but sometimes this tactic is used to influence a subordinate or the boss. It is
risky to use an upward appeal to influence the boss, because it is likely to elicit resentment.
Even when used with a peer, an upward appeal may cause resentment if it is viewed as an
attempt to force the peer to do what the agent wants. The resentment may undermine
agent – target relations, and it can lead to covert forms of resistance by the target person.
EFFECTIVENESS OF DIFFERENT INFLUENCE TACTICS
Research comparing influence tactics indicates that some are usually more effective than
others (Falbe and Yukl, 1992 ; Yukl, Kim, and Falbe, 1996 ; Yukl and Tracey, 1992 ; Yukl
et al., 2008). Consultation and inspirational appeals are two of the most effective tactics for
infl uencing target commitment to carry out a request or support a proposal. Collaboration
is very effective when the target person perceives that the agent ’s request is important but
not feasible without additional resources and assistance. Rational persuasion can be very
effective depending on how it is used. A strong form of rational persuasion (e.g. a detailed
proposal, elaborate documentation, a convincing reply to concerns raised by the target
person) is often effective, whereas a weak form of rational persuasion (e.g. a brief expla-
nation, an assertion without supporting evidence) is much less likely to be effective.
Apprising can be effective when the request or proposal actually offers personal bene-
fits to the target person that are sufficient to justify the time and effort to carry out the
request. Exchange and ingratiation are moderately effective for infl uencing subordinates
and peers, but these tactics are difficult to use for influencing superiors. Subordinates do
not have much to exchange with bosses, and offers of exchange are unlikely to be viewed
as appropriate. Compliments made to the boss just before asking for something are likely
to appear insincere and manipulative. Ingratiation is more effective when used as part of
a long - term strategy for improving relations with superiors rather than as a tactic for an
immediate infl uence attempt with a superior.
Personal appeals are moderately effective for influencing a peer with whom the agent
has a friendly relationship. However, this tactic is only appropriate for a limited range of
requests (e.g. get assistance, get a personal favor, change a scheduled meeting or deadline),
and the outcome is likely to be compliance rather than commitment. Personal appeals are
seldom necessary for infl uencing subordinates, and they are diffi cult to use with bosses.
The least effective tactics for influencing target commitment are pressure and leg-
itimating tactics. These tactics seldom result in target commitment, but they sometimes
result in compliance. Nevertheless, compliance is all that is needed for some types of infl u-
ence attempts (e.g. wear proper safety gear, provide requested information, turn in routine
reports on time).
Coalition tactics can be effective for influencing a peer or superior to support a change
or innovation. However, they are seldom effective for influencing someone to carry out an
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362 G ARY YUKL
assignment or improve performance, especially when viewed as an attempt to “ gang up ”
on the target person. Most coalition tactics are not appropriate or necessary for infl uenc-
ing subordinates except in special cases (e.g. asking a subordinate to move to a different
position in the organization, to pursue a promotion opportunity).
The effectiveness of an attempt can be increased by using more than one type of tactic
at the same time or sequentially (Falbe and Yukl, 1992 ; Yukl, 2006 ). When using tactics
together in the same influence attempt, the agent should select tactics that are compatible
with each other. In other words, select tactics that enhance each other ’s effectiveness and
are easy to use together. Rational persuasion is a very flexible tactic that is usually compat-
ible with any of the other tactics. Strong pressure tactics are not compatible with ingra-
tiation because they weaken target feelings of friendship and loyalty, which ingratiation is
intended to strengthen. When tactics are used sequentially, some types (e.g. ingratiation,
consultation) are more suitable for an initial influence attempt, whereas other types (e.g.
exchange, pressure) are more appropriate for a follow - up influence attempt (Yukl, Falbe,
and Youn, 1993 ).
Even though some tactics are generally more useful than others, success is not guar-
anteed for any individual tactic or combination of tactics. The outcome of an infl uence
attempt depends on other things in addition to the influence tactics that are used, includ-
ing the agent ’s skill in using the tactics, the type of agent – target relationship, the type of
the request (e.g. task related, personal), and how the request is perceived by the target
person (e.g. legitimate, important, enjoyable). A tactic is more likely to be successful if the
target perceives it to be a socially acceptable form of influence behavior, if the agent has
sufficient position and personal power to use the tactic, if the tactic can affect target atti-
tudes about the desirability of the request, if it is used in a skillful way, if it is used for a
request that is legitimate, and if it is consistent with the target person’s values and needs
(Yukl and Tracey, 1992 ).
CASE EXAMPLES
The following case illustrates how important it is to develop an adequate power base and
select an appropriate influence strategy. The provost in a large university asked each aca-
demic department with a graduate program to provide several students to participate in a
new fundraising campaign. The students would telephone department alumni, describe
the department ’s current activities and accomplishments, and then ask for donations to
help support the department. Assigning students to help with fundraising does not fall
within the scope of legitimate authority for department chairs, so it is necessary to ask for
volunteers. These students were overloaded with academic work, and they were reluctant
to perform extra tasks not directly related to this work.
Department X
The chairperson of Department X had strong referent power with the students who spe-
cialized in the graduate program associated with his department. He was a supportive,
considerate teacher who interacted with students outside of the classroom and showed
strong concern for them as individuals. When he met with the students, he explained why
the fundraising was important to the university and how it would benefit the masters program
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363 USE POWER EFFECTIVELY TO INFLUENCE PEOPLE
and future students. His strong rational appeals were supplemented with inspirational
appeals based on student loyalty to the program. Most of the students volunteered to par-
ticipate in the fundraising effort, and they were very effective in getting donations from
program alumni who had not previously contributed funds to the university.
Department Y
The chairperson of Department Y had little referent power with students who specialized
in the graduate program associated with his department. He was arrogant and conceited in
the classroom, he spent little time interacting with the students outside of class, and he did
not develop close supportive relationships with them. At a meeting with the students to
talk about the fundraising campaign, he said that the university needed more donations
from alumni but did not explain how the department or the program would benefit.
This weak rational persuasion was combined with pressure tactics. He demand-
ed that the students participate and told them that they did not have any choice in the
matter. The chairperson was able to pressure some of the students to agree to help with
the fundraising, but discussions among the students after the meeting revealed that they
resented this coercion. Several students decided to complain to the provost. As a result,
the provost decided not use any of the graduate students from Department Y for the fund-
raising. Instead, she hired some undergraduate students and paid them an hourly wage to
telephone department alumni. These undergraduate students were much less effective in
getting donations from alumni.
CONCLUSION
Knowledge about power and influence tactics is useful for people who must gain
cooperation and support from others to perform their job effectively. To infl uence
people, it is essential to develop and maintain a substantial amount of expert and
referent power. In addition, it is desirable to have sufficient position power to back
up personal power. Position power should be exerted in a subtle, careful fashion that
minimizes status differentials and avoids threats to the target person’s self - esteem.
People who exercise power in an arrogant and manipulative manner are likely to
engender resentment and resistance.
The outcome of an influence attempt depends on what tactics are used, how
skillfully they are used, and the context in which they are used. Some of the tac-
tics require a specific type of power to be effective. For example, exchange requires
reward power, hard forms of pressure require coercive power, rational persuasion
requires expert power, and a personal appeal requires some referent power.
Combining tactics is usually more effective for a difficult request than using a single
tactic. In general, the four “ core tactics ” that are most useful for eliciting commit-
ment are consultation, inspirational appeals, collaboration, and strong forms of
rational persuasion. Apprising, ingratiation, or exchange can be useful supplemen-
tary tactics when combined with one or more of the core tactics. Before making an
influence attempt that involves an important objective, it is essential to diagnose the
situation carefully and select tactics that are mutually compatible and appropriate
for the situation.
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364 G ARY YUKL
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EXERCISES
1. Describe a successful influence attempt made by a boss or co - worker with you during
the past few months, and identify the specifi c influence tactics used by the person. Then
describe an unsuccessful attempt by the same person or someone else in the organiza-
tion to influence you, and identify the tactics used by the person. Analyze the reasons
for the success or failure of the two influence attempts. Consider the agent ’ s position
and personal power, the relevance of the tactics for the situation, and your initial atti-
tudes about the objective of the infl uence attempt.
2. Think about an influence attempt that you need to make or would like to make in
the near future. Plan an appropriate influence strategy, taking into account your
power bases, the agent – target relationship, the target ’s attitudes about the infl uence
objective, and your knowledge and influence skills. Select some specifi c infl uence tac-
tics that would be appropriate for this influence attempt and consider the best way
to sequence them (e.g. initial tactics and what you would do if the initial effort is
unsuccessful).
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c20.indd 367 6/17/09 2:54:24 PM
20
Lead through Vision and Values
*
SHELLEY A. KIRKPATRICK
Two key leadership principles are leading through vision and leading through values.
Vision statements can inspire followers to attain high levels of performance. For example,
Pierre Omidyar founded eBay in order to “ [make] the power of the internet available
to . . . people. ” Another example is FedEx ’s vision statement of “ [producing] outstanding
financial returns by providing totally reliable, competitively superior, global, air – ground
transportation of high priority goods and documents that require rapid, time - certain
delivery. ”
Leaders also can motivate others through the values that they define for their organiz-
ations. Values define the acceptable means through which the vision should be attained.
Grocery - chain Wegman’s, for example, chooses to attain its vision as well as profi tability
goals through its values, which include caring about and listening to its workers, having
high standards in the pursuit of excellence, making a difference in the community, and
empowering employees.
In this chapter, proven principles are presented for leading through vision and values.
Vision - based leadership is described fi rst, followed by values - based leadership.
LEADING THROUGH VISION
A vision is a leader ’s statement of a desired, long - term future state for an organization
(Burns, 1978 ; House, 1977 ). Although a leader may have a vision of what the organiz-
ation can become over the long run, the vision will have little impact on followers unless it
is communicated. The communicated vision is referred to as a vision statement. Most vision
statements are not intended to be achieved within a given period of time; instead, they are
intended to be pursued or worked toward on a daily basis over a long timeframe.
*
Note: I am grateful to Selena Rezvani, Mark Leheney, and Susan Goughnour for the
helpful comments and assistance in preparing this chapter.
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368 SHELLEY A. KIRKPATRICK
THE IMPORTANCE OF VISION
A key function of a leader is to inspire, or impel, others to carry out the vision state-
ment. Employees, team members, and other stakeholders can be said to play the role of
followers. Considerable evidence demonstrates that well - formed vision statements impact
important outcomes, including the organization’s performance, followers’ performance,
and followers’ attitudes. Of course, not all vision statements are equally effective – even
though the research evidence is supportive of the impact that a vision statement can have,
the vision statement must have certain characteristics in order to be most effective (see
below).
Over 50 studies have supported the relationships between communicated vision
statements and desired outcomes. These studies have been conducted across a variety
of samples, including students and managers who served as laboratory study partici-
pants, military combat and non - combat leaders, middle - and lower- level managers, entre-
preneurs, educational leaders, national leaders, political leaders, and corporate leaders.
A variety of research methods were employed in these studies, including case studies, lon-
gitudinal studies, field studies, interviews, laboratory experiments, and historical analysis
of archival information.
In sum, there is strong evidence that a relationship exists between a communicated
vision statement with certain characteristics and follower and organizational outcomes.
Below, additional details are presented on the relationship between the vision statement
and organizational and individual outcomes, followed by a description of the characteris-
tics that comprise an effective vision statement.
Vision impacts organizational performance
A wide range of outcomes has been examined, including measures of organizational per-
formance – business performance, stakeholder performance, and organizational change – as
well as individual performance. The relationship between a communicated vision statement
and the organization’s performance has been supported in studies of organizations that are
in competitive and entrepreneurial environments (Baum, Locke, and Kirkpatrick, 1998 ;
Oswald, Stanwick, and LaTour, 1997 ). When top managers and middle managers com-
municate a vision statement, outcomes such as business performance and organizational
stakeholder effectiveness have been positively impacted (Hart and Quinn, 1993 ; Howell and
Avolio, 1993 ; Howell and Higgins, 1990 ). The vision statement has also been shown to have
a positive impact on group, team, or division performance (Barling, Weber, and Kelloway,
1996 ; Bass, Avolio, Jung, and Berson, 2003 ; Schaubroeck, Lam, and Cha, 2007 ).
Further, the vision statement can play a critical role in facilitating organizational
change (Coulson - Thomas, 1992 ; Doz and Prahalad, 1987 ; Larwood, Falbe, Kriger, and
Meising, 1995 ; Roberts, 1985 ; Trice and Beyer, 1986 ). For example, the vision content
examined by Larwood et al. ( 1995 ) was related to rapid change in the firms that were
studied. By communicating a desired future state, the vision statement prepares the organ-
ization for change and provides a mechanism for interpreting changes as they occur. The
vision statement provides a context for organizational change by providing a compelling
reason for moving toward the vision.
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369 LEAD THROUGH VISION AND VALUES
Vision impacts individual, or follower, performance and attitudes
Follower attitudes, such as commitment to the organization and satisfaction, are posi-
tively affected by the presence of a vision statement. To isolate the effects of the vision
statement on follower performance, laboratory simulations have found that a leader who
communicated a vision positively affected follower performance (Howell and Frost, 1989;
Kirkpatrick and Locke, 1996 ; Oswald, Mossholder, and Harris, 1994 ). Similar results were
found in field studies that examined leader vision statement effects (Bono, Jackson, Foldes,
Vinson, and Muros, 2007 ; Colbert, Kristof - Brown, Bradley, and Barrick, 2008 ; Niehoff,
Enz, and Grover, 1990 ). This research supports the idea that a leader does not have to
have a charismatic personality or expressive communication style in order to effectively
motivate followers.
The vision statement has a positive effect on followers’ attitudes. Follower attitudes
that are impacted include trust in the leader, commitment to the organization, satis-
faction with the task, and clarity of the task (Barling et al., 1996 ; Kirkpatrick and Locke,
1996 ; Podsakoff, MacKenzie, Moorman, and Fetter, 1990 ).
Effective vision statements have specific characteristics
A wide range of vision statement characteristics have been included in visionary leader-
ship research. The following characteristics of vision statements are associated with posi-
tive outcomes, including organizational and individual performance (Baum et al., 1998 ):
◆ Brevity. A vision statement should be fairly succinct, which makes it easy for employ-
ees to remember as well as for managers and leaders to communicate. In two sep-
arate studies of organizational vision statements, when the leader was asked to write
down his/her vision for the firm or unit, the average length of the vision statement
was about 35 words, or two to three sentences (Baum et al., 1998 ; Kirkpatrick,
Wofford, and Baum, 2002 ).
◆ Clarity. Because a wide variety of jobs and individuals (each with their own values,
interests, personalities, skills, and so forth) exist within most organizations, it is easy
for employees to obtain widely varying messages that are incongruent and inaccu-
rate. The challenge is to create a vision statement that applies to the entire organiz-
ation and its different jobs/employees while at the same time unites the organization
and provides a stable, transcendent goal. Clarity often can be obtained by avoiding
jargon and buzz - words and by using understandable terminology. Writing concise
sentences is another way of obtaining a clear vision statement.
◆ Abstractness and stability. Vision statements are long term in nature and are meant to
provide an abstract, stable picture of the organization’s desired future. Abstractness
means that a vision presents a general enough picture of the future that the vision
can be reached in practice in many different ways. Abstractness also provides for
fl exibility by providing guidance to employees when they encounter novel or unfore-
seen situations. This characteristic is increasingly important in virtual and global
work environments in which employees must make decisions. Stability implies that
the vision should remain in place over the long run. The vision statement should be
timeless, not requiring revision once it is achieved in practice. This is not to say that
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370 SHELLEY A. KIRKPATRICK
a vision statement should never be revised or updated. When revision is necessary, it
should not be because the vision has been completed but because the organization’s
ideal goal has changed.
◆ Challenge. Effective vision statements should not be too easy or too hard to carry out
on a daily basis, but rather should challenge employees to live up to the vision. By
describing a desirable future, the vision statement provides a future that is not easily
achieved but is attainable.
◆ Future orientation. Effective vision statements do not describe the current state of
the organization. Nor do they describe short - term desired states, such as what the
organization intends to achieve this year or the following year. Instead, vision state-
ments are long term. They describe the organization’s desired end - state well into
the future. Effective vision statements often describe the ongoing actions in which
the organization will engage.
◆ Desirability or ability to inspire. An effective vision statement portrays a picture of a
desirable future and, as such, is ideological in nature. By tapping into the values of
the leader and followers, the vision statement should motivate and inspire them to
work toward achieving it. The vision statement is a persuasive statement that draws
on the values of followers. References to followers’ self - worth and effi cacy ( “ We have
what it takes to achieve the vision and deserve to have the opportunity to become
the best in our industry ” ) as well as the organization’s collective identities ( “ By work-
ing together, we can become the pre - eminent firm in our industry ” ) are techniques
that can inspire followers (Shamir, House, and Arthur, 1994 ).
◆ Identification of intended products, markets, and strategy. The vision statement should spec-
ify the products and services, markets, and strategy that it intends to pursue. It also
draws a line between what the organization is willing and not willing to do to suc-
ceed (Ireland and Hitt, 1990 ). Vision statements are more effective when they focus
follower attention on the markets to which the organization’s products will be sold.
How products and the market are defined will impact new or innovative products –
for example, defining the company as a bicycle manufacturer will lead to different
products and markets than defining the company as a producer of transportation.
The strategy, or how those products will be developed or produced and sold, also
may be part of the vision statement. (Nanus, 1992 ; Scott, Jaffe, and Tobe 1993 ).
Effective vision statements are unique to the organization
An effective vision statement includes references to the organization’s uniqueness, such as
its products/services, organizational history, market(s), customers, or geographic location.
An organization that describes how it is unique has the ability to differentiate itself from
its competitors and to make employees feel that they are part of something special. This
enhances the collective identity among the organization’s employees. Such references are
likely to contain specific, vivid images that are easily remembered; leaders often communi-
cate the organization’s unique vision through storytelling of illustrative events and actions.
These types of unique statements are unlikely to change signifi cantly over time.
An exception to this principle is when the organization must change in order to survive.
Organizations that have experienced crises or significant failures may need to break free
from their past and can do so by using a new vision statement to put the organization on a
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371 LEAD THROUGH VISION AND VALUES
new path. In such a case, the leader may draw comparisons between the prior history and
the new future that will be created in order to build commitment to the vision.
Despite broad empirical support for visionary leadership theory, the vision formu-
lation process is regarded as somewhat of an art form. A leader ’s intuition and insight
into follower values, along with the organization’s unique culture and environment, affect
the vision that is developed and its effectiveness. One study found that an effective vision
statement for a public - sector service organization may be very different from an effective
vision statement for private - sector manufacturing companies (Kirkpatrick et al., 2002 ).
Specifically, the private - sector manufacturing firms were more effective when their vision
statement emphasized achievement themes, such as efficiency and excellence. In contrast,
the public - sector service organizations, for whom positive stakeholder relationships are
required, were more effective when themes of courtesy and customers’ best interest were
emphasized in the vision statement.
Note that these research findings do not mean that manufacturing firms should neglect
customer service! Rather, the leader could employ a vision statement emphasizing
efficiency, translating it into a strategy of serving customers quickly. Similarly, leaders of
public - sector organizations that focus on customers may decide to pursue a culture of cus-
tomer- service excellence, fi nding new ways to meet customers ’ needs with fewer resources.
Almost every organization has a vision statement. However, many vision statements do
not reference unique aspects of the organization, and thus are likely to be less effective
than vision statements that do. For example, many vision statements take a generic form of
“ Our vision is to be the best. ” This type of vision statement does not distinguish the com-
pany from its competitors and is unlikely to have as great an impact as the following vision
statement of an architectural woodworking company that references its unique client base:
We will be known for the striking beauty of the veneered cabinets that we will sell to
the nation’s most famous tenants.
Another woodworking firm emphasizes achieving quality through customer commit-
ment and a continuous innovation process:
To profit by being the respected leader in providing quality architectural woodwork
and services to our customers through our commitment to excellence, continuous
innovation, and the development of long - term relationships.
MEDIATORS OF VISION STATEMENT EFFECTIVENESS
In order to impact organizational and follower outcomes, the leader ’s vision statement
must first have an impact on followers’ motivation. Several ways in which a vision state-
ment can affect outcomes have been researched. These mechanisms, or mediating vari-
ables, focus on the impact that the vision statement has on followers’ motivation. A vision
statement is more likely to lead to the desired outcomes when it inspires followers.
Mechanisms that have been identifi ed include the following:
◆ Goal alignment. The vision statement serves as a long - term, general goal. Although
everyday goals are typically short term and fully achievable, vision statements
are long term and timeless. Thus, vision statements rely on similar motivational
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372 SHELLEY A. KIRKPATRICK
mechanisms, such as focusing attention, as traditional work- related goals (Locke and
Latham, 1990 ). When individual and group goals are aligned, or consistent, per-
formance is higher than when individual and group goals are not aligned (Crown
and Rosse, 1995 ). Followers are likely to be committed to their goals when a vision
statement is present (Piccolo and Colquitt, 2006 ; Arnold, Turner, Barling, Kelloway,
and McKee, 2007 ).
◆
Follower self - confidence. The vision statement raises followers’ self - confidence by clari-
fying the purpose of the organization and inspires them to help achieve the vision.
Some vision statements make reference to followers’ capabilities – such as talent,
intelligence, or ingenuity – which, in turn, tells followers that they are qualifi ed to
achieve the vision. The vision statement can boost followers’ self - confi dence by
emphasizing to them that they are capable of reaching a meaningful goal that will
result in a better future (Shamir, House, and Arthur, 1993 ).
◆
Shared meaning. The vision statement provides a common language that followers can
use to explain how their actions are effective and desirable (Shamir et al., 1994 ).
Followers’ efforts are further aligned with the vision when followers possess the same
understanding as the leader regarding what it is they are to achieve. Having a shared
vision that results in the same common meaning among followers can be especially
important in situations when followers must make their own decisions, such as a cri-
sis or a non - routine situation.
◆
Perceived job characteristics. The vision statement can reframe how followers view their
jobs. Research supports the notion that followers who report working for a super-
visor who displays transformational behaviors – that is, acting in an inspiring and
motivational manner by communicating a vision statement, providing idealized
influence, and intellectually stimulating followers – are more likely to see their jobs
as more challenging and meaningful, than followers who do not report working
for a supervisor who displays those behaviors (Piccolo and Colquitt, 2006 ; Arnold
et al., 2007 ).
An effective vision statement impacts desired outcomes primarily due to its ability to
motivate and inspire followers. However, additional mediating factors have not been iden-
tifi ed or widely studied.
MODERATORS OF VISION STATEMENT EFFECTIVENESS
It is accepted that the situation affects leadership emergence and effectiveness ( Vroom and
Jago, 2007 ), yet little research has focused on specific contingencies that impact the effec-
tiveness of a leader ’s vision statement. It is important to be aware of these contingencies
because they may provide exceptions to the research findings discussed above. Two con-
tingency factors – organizational environment and national culture – have been identified and are
described below.
A vision statement has the unique ability to focus attention, coordinate actions, and
provide guidance in novel situations. Traditional management devices, such as plans,
procedure manuals, or job descriptions, may not exist in new or rapidly growing organiz-
ations, for example. Also, in today ’s fast - paced, global marketplace, employees may not
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373 LEAD THROUGH VISION AND VALUES
be able to follow a traditional chain - of - command to receive guidance in a short time-
frame. A highly effective vision is especially important when faced with rapidly changing
environments, when specific rules may be dysfunctional due to their narrow focus and
lack of adaptability, or in the early stages of the organization’s lifecycle where routines
are not yet in place (Yukl, 2005 ).
Leaders who communicate a vision in multicultural settings, be they in a multinational
firm or an organization with a diverse workforce, need to consider that the values con-
tained in the vision statement may not be as appealing or easy to discern to people from
a different cultural background. In such instances, the leader must take steps to communi-
cate an inclusive vision and allow followers time to clarify their personal values and realign
them with the vision. Followers also must have the capacity to identify and be aware of
their own values.
Leaders may not want to reference the organization’s past periods of radical organiz-
ational change. References to those stressful periods will likely increase resistance to the
vision. Similarly, aligning the vision with societal values that are inconsistent with com-
petitiveness is not recommended. Research has shown that there are societies with a low
level of performance orientation, such as some societies in Latin America (House, Hanges,
Ruiz - Quintanilla et al., 1999 ; Javidan, Dorfman, de Luque, and House, 2006 ). Aligning
the organization with this societal norm would hinder the international competitiveness
of the organization. The leader must carefully weigh the imbalance between the values
underlying the vision statement and societal norms.
The need for a high degree of participation depends on the national culture of the
followers, the amount of crisis or stress in the organization, and the ability of the leader to
develop a unique vision statement. In collectivistic countries, such as China, the leader ’s
attempt to take a highly participative approach to vision formulation would be seen as
disrespectful ( Javidan et al., 2006 ). Followers in those countries expect authoritative lead-
ership and perceive that taking their opinions into account is a sign of incompetence or
weakness. Leaders in collectivistic national cultures may need either to gradually change
the organization so that participation is accepted or to find other ways to gain employee
buy - in of the vision statement, such as through rewards and role modeling. Similarly,
followers who are confronted with an organizational crisis or stressful uncertainty tend to
look for a leader to give decisive direction rather than ask for their input. Finally, many
effective leaders did not arrive at the vision statement by themselves but through insights
that were shared by followers.
EXCEPTIONS
Articulating the vision in a dramatic way may lead to aversion in organizations and
countries which have experienced charismatic leaders who led their organization or country
into a disaster ( Javidan et al., 2006 ). In Germany, for example, a leader who uses dramatic
rhetoric is likely to be viewed with suspicion due to the traumatic experience with Adolf
Hitler, who communicated his vision in an extremely dramatic manner. Similarly, some
national cultures do not value highly expressive behaviors. For example, in Nordic countries,
which include Denmark, Sweden, Finland, and Norway, dramatic communication lies
outside accepted social norms and thus is likely to lead to rejection of the leader.
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374 SHELLEY A. KIRKPATRICK
IMPLEMENTING THE VISION
Even the most effective vision statement will not impact organizational or individual out-
comes if the leader does not actively implement the vision statement. In addition to ensur-
ing that the vision statement is understood, the leader must also continue to clarify it and
display behavior that is consistent with it. Below are principles for effectively implement-
ing a vision statement.
1. Build understanding of the vision among the top management team. The leader must consist-
ently and repeatedly communicate the vision statement to the top management team.
Ensuring that the vision statement is well understood among the top management
team is essential. The leader relies heavily on the top management team to communi-
cate the vision statement to other followers as well as find ways to implement the
vision statement within their areas of responsibility. The top management team must
possess a detailed understanding of the vision statement and serve as role models who
display vision - consistent behaviors.
2. Encourage a high degree of participation in the implementation of the vision statement. Including
followers in the vision implementation process ensures that the followers will be com-
mitted to the vision and, thus, it will be more likely to be carried out. Followers from
all levels and functions in the organization should be included in finding new ways
to carry out the vision. This is consistent with organizational image theory, which
argues that the degree to which individuals identify with the organization depends
on the extent to which the vision allows individuals to enhance their self - concept
(Dutton, Dukerich, and Harquail, 1994 ). However, as noted above, leaders in col-
lectivistic cultures may need to rely on other means to gain follower commitment to
the vision.
3. Begin by communicating the vision statement to highly influential and cooperative individuals
in the organization. The use of opinion leaders or champions in the organization is
another way to gain support for carrying out the vision (Howell and Higgins, 1990 ).
Opinion leaders may reside at all levels of the organizational hierarchy and may
include middle managers and supervisors as well as employees at lower levels of
the organization; they also may be stakeholders, such as union leaders (Locke,
Kirkpatrick, Wheeler, Schneider, Niles, Goldstein, Welsh, and Chah, 1991 ). These
influential individuals will not only help communicate the vision statement to other
followers but will also serve as positive role models of the desired behaviors.
4. Motivate, inspire, and teach followers to carry out the vision statement. Motivational techniques
that leaders use include setting goals that are consistent with the vision statement,
rewarding them for goal achievement and/or performance, and providing individual-
ized coaching (Bass, 1985 ). Effective leaders express confidence in followers’ ability
to achieve the vision. Visionary leaders are confident that followers can work toward
the common vision. The leader ’s expectation of high performance has been found to
result in higher performance than when poor performance is expected (Eden, 1990 ).
Leaders inspire followers by getting them to see the world in new ways. Leaders also
provide individualized consideration through teaching, mentoring, coaching, or even
supporting followers during difficult times. They also promote the vision statement
c20.indd 375 6/17/09 2:54:28 PM
375 LEAD THROUGH VISION AND VALUES
by removing obstacles that prevent vision attainment – by restructuring the organiz-
ation, eliminating stifling processes, and adding new processes that give the required
capability.
5. Role model behaviors that are consistent with the vision statement. Effective leaders display
behaviors that reflect the vision statement. Role modeling helps communicate the
vision through action to followers (Bandura, 1986 ). It demonstrates that the leader
is committed to the vision statement and also tells followers the behavior required
to implement the vision. Followers are more likely to commit to the vision, be high-
ly motivated, and be confident in their ability to work toward the vision when the
leader serves as a role model.
6. Use symbols, metaphors, and images that are consistent with the vision statement. Symbols, meta-
phors, and images can send powerful messages (Fairhurst and Sarr, 1996 ). They can
instantly communicate the essence of the vision statement and provoke emotion-
al reactions more than written words. They also help anchor the vision deeply in
the minds of the followers and ensure that the vision statement is passed on to
future members of the organization. Although effective verbal communication
skills are beneficial, the use of symbols, metaphors, and images are also powerful
techniques for communicating the vision statement. Great verbal communication
skills are helpful for communicating the vision, but effective leaders also use concrete
examples to convey complex, abstract concepts, draw pictures, or build models to
illustrate the vision (Locke et al., 1991 ).
LEADING THROUGH VALUES
Another key principle for effective leadership is to lead through values. Although vision
statements may include values, they are not primarily value statements. Values, as noted
earlier, indicate the proper means for attaining visions. By communicating and acting in
accordance with a coherent set of values, the leader can influence followers to abide by
the same values. In this manner, the leaders ’ and followers’ actions are aligned with a
common set of values.
The term values is often misunderstood. Everyone possesses certain values, which are
what an individual deems important and works to acquire or retain (Peikoff, 1991 ). One
way to lead is by specifying a set of morals (also called personal values or moral values)
that the leader wants followers to abide by. Research shows that individuals can reliably
identify their value hierarchies (Rokeach, 1973 ). That is, they can identify specifi c values
and rank them in order of importance.
A business ’s values are the “ organization’s precepts about what is important in business
and life, how business should be conducted, its view of humanity, its role in society, the
way the world works, and what is to be held inviolate ” (Collins and Porras, 1991 ). A busi-
ness ’s values will properly include moral values (e.g., honesty, integrity), but may include
other values as well such as innovation, customer service, and quality (Locke, 2004 ).
Both the vision and the company ’s values motivate action, and ideally they will work
synergistically – the general goal and the means to achieve it. Both must be communi-
cated in order to be effective.
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376 SHELLEY A. KIRKPATRICK
IMPLEMENTING VALUES
State the desired values
A leader must identify and then communicate the desired business values to which the
organization will adhere. Business values should be viable, balanced, aligned with each
other, and authentic (Hultman, 2005 ). Common and desirable business values include
cooperation, honesty, integrity, change, and a more positive future, and confi dence
in employees ’ ability to achieve the vision (Conger and Kanungo, 1987 ; Locke and
Woiceshyn, 1995 ; Shamir et al., 1993 ). In fact, these values have been shown to be univer-
sally accepted attributes of leaders across a wide range of societies ( Javidan et al., 2006 ).
A leader who identifies and communicates a set of personal values can improve fol-
lower commitment to the organization (Den Hartog and Verburg, 1997 ; Dvir, Kass, and
Shamir, 2004 ; Rowden, 2000 ). The leader must explain the desired personal values and take
steps to gain employee buy - in to those values. For example, UK - based law fi rm Eversheds
embarked on a campaign to identify and communicate a set of shared values, holding
“ have your say ” sessions to discuss and gain commitment from employees. As a result,
Eversheds has changed a number of key processes to implement its values of client - centered;
straightforward, mutual respect, teamwork; accountability and continuous improvement
(Krais and Bloomfield, 2005 ).
Model the desired values
Perhaps more important than stating the values, the leader must display those values in
daily actions. Even in difficult circumstances, it is crucial that followers perceive the leader
as acting in accordance with the stated values. A leader who is seen as acting inconsist-
ently with stated or implied values is not likely to be as effective as a leader who “ walks
the talk. ” By role modeling the desired behaviors, the leader motivates followers to behave
in the same manner and demonstrates the behaviors that should be displayed.
The leader also must act when followers fail to display the desired values. In some
cases, the leader may engage in disciplinary action or even termination, while in other cases
the leader may provide individualized attention or consideration to enhance the follower ’s
understanding on the vision statement.
When a leader fails to act in accordance with stated values, the results can be disas-
trous. Take, for example, the case of Countrywide Financial, a home loan lender, and its
top management team, who came under scrutiny by its shareholders and the fi nancial
media for not acting in accordance with its values, especially given its poor fi nancial per-
formance in late 2007 and early 2008. Countrywide espouses a principle - based mission
of “ helping individuals and families achieve and preserve the dream of home owner-
ship ” through a “ high - performance and high - integrity culture. ” With its stock plummet-
ing to 80% of its 2006 value and many homeowners facing foreclosure, Countrywide
planned a ski trip at a Colorado Ritz - Carlton resort for 30 mortgage lenders. After
receiving scrutiny that this was not reflective of a high - integrity culture, the trip was can-
celed, but no doubt made a bad situation even worse for Countrywide and its leadership
team (Hagerty, 2008 ).
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377 LEAD THROUGH VISION AND VALUES
Some researchers claim that effective leaders must be self - sacrificial. It is not always
clear what they mean by this. Sometimes it refers to the leader not taking bonus money
that was earned when the leader ’s organization met its goals or not fulfilling his or her
commitment to followers. But this would not be a sacrifice if the leader held justice as a
moral value. It would be in the leader ’s self - interest to be fair to the followers because, if
they were treated unfairly, then followers would tend to leave (Locke, 2004 ). Ultimately,
this would hurt the organization and thus undermine the leader ’s effectiveness as well as
undermine the leader ’ s self - interest.
Self - sacrifice has also been referred to as the leader taking time away from family in
order to help the business succeed. Many working people, including leaders, are often
faced with this conflict. Choosing to work additional hours rather than spend that time
with family is not a sacrifice if one passionately loves one ’s work and career. However,
it would be a sacrifice if one disliked one ’s job and preferred spending those additional
hours at home. Spending extra hours at work can be a sign of commitment to one ’s job.
A truly self - sacrificial leader would be a leader who, out of a sense of duty, worked for
a company that he did not like, made a product that he did not value, worked with people
that he despised and customers that he abhorred, at the expense of leading a company that
truly inspired him. No business leader could be effective if motivated in this manner.
In sum, genuine leader self - sacrifice cannot be an effective role - modeling or moti-
vational technique. In an actual business environment – where a long - term commitment
and motivation on the part of the leader and followers are required – nothing less than a
passionate, personal commitment on everyone ’s part will do.
Integrate the values into organizational systems
The desired values can be further implemented by integrating them into the organiz-
ation’s systems. Human resources systems, for example, should reinforce the stated business
values by basing rewards and promotions on results as well as achieving those results by
practicing the desired values. Other organizational systems, such as the work processes,
organizational structure, and technology, should also be aligned so that they support the
desired values.
For example, the Walt Disney Company has core values of imagination and whole-
someness. These values are reflected in its movies and theme parks. Disney theme parks
are family oriented, and theme park employees are hired for their ability to interact with
“ guests. ” Disney ’s street sweepers, who are responsible for keeping the park clean, are not
just hired for their skill with a broom, but also must be able to communicate with guests
and work well with other team members. To give another example, Seattle - based depart-
ment store Nordstrom has relied on the same core values for its entire 100 plus year his-
tory. These values include delivering outstanding customer service and striving for high
individual productivity. Nordstrom ’s values can be observed in its commission - based com-
pensation plan for its store clerks, its customer service policies, and its strategic focus as an
up - scale department store.
The organization and its values should not change because of shifting popular opinion,
competitive forces, or changes in corporate strategy. Core values should be intrinsic to the
organization ’ s business, reflected throughout the organization, at all levels, in all units, in
stated policies as well as actions by leaders, managers, and employees.
c20.indd 378 6/17/09 2:54:29 PM
378 SHELLEY A. KIRKPATRICK
CASE EXAMPLES
BB & T Bank: Living its Values
Founded in 1906, Branch Banking and Trust Company (BB & T ) is currently the USA’s
14th largest financial institution, with $ 133 billion in assets. BB & T is headquartered in
Winston - Salem, North Carolina, and operates bank subsidiaries in 11 states, primarily
in the Southeastern USA.
BB & T has pursued an acquisition strategy since the mid - 1990s, resulting in slow
and steady growth. Despite its cautious approach, BB & T consistently beats its peers in
the most important measure of banking effi ciency – return on assets. Despite recent
downturns in the banking and lending industries, BB & T continues to steadily grow its
assets and market share.
BB & T has recorded 26 consecutive years of increasing operating earnings and has
demonstrated steadily increasing results for virtually every measure of success in its
industry – market share, diversification of its income sources, cost control, productivity,
dividend increases, and customer satisfaction and loyalty. Its growth and current market
position can be attributed to its present chairman and CEO, John Allison.
Before Allison’s tenure, this rural lender based in North Carolina ’s farm country had
$ 5 billion in assets. After acquiring 50 banks and thrifts, 47 insurance agencies, and 14
non - bank financial services firms, as well as experiencing organic growth, BB & T ’ s stock is
up roughly 700% under Allison.
Allison first joined BB & T in 1971 after graduating from college, and he was appointed
to his current position in 1994. He often sounds like a typical CEO, citing fi nancial ratios
and accounting acronyms when explaining his latest acquisition. One gets the sense the he
is not your typical bank CEO when he quotes Aristotle, “ We are what we repeatedly do. ”
Allison can speak at length about classical philosophy, providing two - and - a - half hour
lectures on deductive reasoning and the value of logic in decision making. He takes a week
off each year to study philosophy. He requires his senior managers to attend educational
retreats and “ encourages ” them to read a non - banking book monthly.
Allison made philosophy a relevant science to the world of banking. He applies Ayn
Rand ’s objectivist principles of individualism, marrying it with accountability. This is refl ected
in the BB & T management structure in which regional presidents are given autonomy, but it
seems that every year one of them is relieved of their duties. Specifi c goals are set; sales reps
are expected to make 10 calls daily, two of which must be in person. Branch offi cers are
given commercial lending authority – not a generally accepted industry practice.
BB & T is clearly charting its own course through the values that Allison has identi-
fied. Its values are detailed in a 30 - page manual entitled The BB & T Philosophy . Although
Allison was the driving force behind the philosophy, he obtained support for it from
BB & T ’s board of directors and senior managers. The philosophy (which also appears at
www.bbt.com ) consists of four main components:
◆ BB & T Vision, Mission, and Purpose
◆ BB & T Values
◆ Concepts that Describe BB & T
◆ Strategic Objectives
c20.indd 379 6/17/09 2:54:29 PM
379LEAD THROUGH VISION AND VALUES
The BB & T Vision is “ To create the best financial institution possible and to be the best
of the best. ” The vision is further elaborated by the Mission, or reason for existence, which
is “ to make the world a better place to live by (1) helping our Clients achieve economic
success and financial security, (2) creating a place where our Employees can learn, grow,
and be fulfilled in their work, and (3) making the communities in which we work better
places to be; thereby, optimizing the long - term return to our Shareholders, while provid-
ing a safe and sound investment. ” The bank ’s Purpose is summarized as “ Our ultimate
purpose is to create superior long - term economic rewards for our shareholders ” and is
explained further in detailed paragraphs explaining the importance and inter- relation-
ships of clients, employees, communities, and shareholders.
BB & T Values form the foundation of the vision; employees are expected to display the
values on a daily basis. The 10 values and a brief description of each ( paraphrased from
The BB & T Philosophy ) are:
◆
Reality (fact - based): Actions must be based on the facts.
◆
Reason (objectivity): Decisions must be based on a logical reasoning process based
on facts.
◆
Independent thinking: Employees are challenged to make rational decisions; cre-
ativity can only occur through independent thought.
◆
Productivity: We turn our thoughts into action to improve economic well - being,
including company profi tability.
◆
Honesty: We act consistently with reality; we say what we mean and mean what
we say.
◆
Integrity: We act consistently, in accordance with our logically - developed principles.
◆
Justice (Fairness): Individuals are evaluated and rewarded objectively, based on their
contributions toward accomplishing the mission and adhering to our values.
◆
Pride: We are proud of our accomplishments that are achieved by living our values.
◆
Self - esteem (Self - motivation): By acting in their rational self - interest and doing their
work well, our employees earn positive self - esteem.
◆
Teamwork/Mutual supportiveness: Our work requires an integrated effort among
outstanding individuals to accomplish important tasks.
Rather than simply listing values and expecting employees to understand how they are
relevant to their job, The BB & T Philosophy shows how the values are applied in the company:
◆
A list of Concepts that Describe BB & T – client - driven, quality oriented, effi cient, grow-
ing both our business and our people, continuous improvement, and objective
decision making – is presented.
◆
Special attention is given to describing the BB & T management style – a participa-
tive and team - oriented process provides better information and thus results in better
decisions.
◆
Attributes of an outstanding BB & T employee are described as “ they believe that their
lives matter and that they can accomplish something meaningful through their work. ”
These values served BB & T well during the recent downturn in the lending industry.
Guided by its values, BB & T decided that subprime loans were not based on reality or
c20.indd 380 6/17/09 2:54:29 PM
380 SHELLEY A. KIRKPATRICK
facts but instead were irrational. These types of loans made up only .6% of BB & T ’s mort-
gage loan portfolio.
Because Allison’s personal values played a strong role in formulating and articulat-
ing The BB & T Philosophy, there is a high degree of consistency between his personal and
company values. Allison and BB & T do not pay lip service to the philosophy. They expect
employees to act in accordance with the values. Those that don’t lose their jobs, regardless
of their title, level in the organization, or productivity. In fact, the values are refl ected in
BB & T ’ s human resources system – including selection, training, performance appraisal,
and promotion – as well as its strategic decisions, such as choosing to avoid exotic mort-
gages that resulted in losses at many of its industry competitors.
Allison firmly believes that incorporating the company ’s values into its decision -
making process improves its chance of success. Not only are the values in the best interest
of BB & T, they are also in the best interest of individual employees as well as the com-
munity which are home to BB & T banks. In the forward to the Philosophy, Allison sums
up his views nicely, “ We believe that competitive advantage is largely in the minds of our
employees as represented by their capacity to turn rational ideas into action towards the
accomplishment of our mission. ”
SOURCES
BB & T 2007 Annual Review.
Early, J. ( June 20, 2007), A conversation with BB & T, The Motley Fool ( www.fool.com ;
accessed January 11, 2008).
Vardi, N. ( November 1, 2006). How does BB & T ’s John Allison explain his slew of bank
deals? By quoting the classics. Forbes ( www.forbes.com , accessed January 11, 2008).
Harrington, M. ( January 8, 2008). BB & T CEO discusses philosophy, economy at luncheon. The
Business Journal of the Greater Triad Area ( triad.bizjournals.com , accessed January 11, 2008).
Roberts, R. (May 7, 2007). Allison on Strategy, Profi ts, and Self - Interest. The Library of
Economics and Liberty, podcast and transcript available at www.econtalk.org (accessed
February 7, 2008)
MidState Analytics
1
MidState Analytics is a small, privately owned firm of 450 employees that provides
specialized scientific and technical analysis to government organizations and commercial
companies. Headquartered in Chicago, MidState Analytics was founded in 1975 by three
graduate school colleagues. The founders are no longer active in the company but remain
as major shareholders.
MidState experienced sustained, steady growth over the past decades, in part due to
its ability to hire top - notch scientists in a wide range of specialty areas, such as biology,
chemistry, systems engineering, physics, mathematics, and economics. A typical consult-
ing engagement involves a cross - disciplinary team of scientists and project managers who
1
This fictional case draws upon several real-life cases, but any resemblance to an actual
organization or individuals is purely coincidental.
c20.indd 381 6/17/09 2:54:29 PM
381 LEAD THROUGH VISION AND VALUES
often work on - site at client locations. A company vision statement hangs on the wall in the
company lobby:
MidState Analytics provides sound, impartial scientific analysis and research in order
to create safe, effective products and services.
Although no formal statement of values exists, the scientific backgrounds of MidState ’ s
employees provide them with generally accepted common values of research integrity,
sharing of methodology and research findings, mentoring of more junior scientists, and
treating each other with professionalism.
The company has four divisions – Consumer Products, Health, Information Systems
Support, and Engineering. In early 2002, the director of the Consumer Products division,
Jim Modell, brought in a new practice manager, Gabe Addison, to develop business in
the toiletries and cosmetics industry. Modell and Addison knew each other from brief
interactions at professional conferences. Addison’s track record was impressive – author
of several patents, a stint as a faculty member at the University of Massachusetts, and
publications in top - notch academic journals. In his 10 - year career, Addison worked at fi ve
different organizations, which, in Modell ’s mind, gave Addison a solid base of technical
and managerial experience.
During Gabe ’s interviews with MidState ’s CEO, Gordon Levy, and the rest of the lead-
ership team, Gabe made sure to mention his many high level contacts at potential client
companies. Levy remarked, “ With Gabe ’s high level contacts, we could easily win new
clients and quickly grow our revenues. ”
Initial success. Levy ’ s impressions proved true, at first. In his first year, Addison secured
four new major clients, allowing him to build a staff of about 50 scientists and tech nicians.
Some team members transferred from within the company, while the majority were new
hires. Addison’s days were spent meeting with the clients and supervising the project teams
who mainly worked on - site at client locations around the greater Chicago area.
A few months into one project for the NPG Corporation, Addison’s staff grew con-
cerned. After a cursory look at the team ’s analysis, Addison singularly authored a fi nal
report that contradicted the analysis. Karen McKnight, a senior analyst and team lead,
asked Addison to take another look at their analysis. Addison snapped at her, “ NPG needs
to move quickly. These are the results they want. ” When McKnight calmly insisted that
Addison take the results home to read, Addison became irate, telling her, “ I have more
experience than anyone else here. You need to be shown how this business works.”
Downward slide. Over the next few months, McKnight and her team experienced sev-
eral similar incidents despite the fact that Addison began visiting the NPG team less fre-
quently. When he did show up, he became incensed that the team had pressed forward in
his absence. The team became increasingly frustrated and the work pace began to slow
down, resulting in further reprimands from Addison for lack of productivity. Scolding
McKnight in front of her team, Addison shouted, “ Why are you holding team meetings?
Stop meeting and get to work. ” Yet during his next visit, he admonished, “ This project
requires teamwork. How can you work together if you don’t hold team meetings? ”
After one particularly bad day in which Addison snapped at one of McKnight ’s bright-
est team members for “ not knowing anything, ” McKnight called MidState colleague and
c20.indd 382 6/17/09 2:54:30 PM
382 SHELLEY A. KIRKPATRICK
close friend, Bart Thierry, who was heading up Addison’s team at O ’ Brien Industries.
Thierry and McKnight spent several hours comparing stories, only to discover that they
were seeing the same behavior from Addison. Soon, all four team leads under Addison
began to compare notes.
McKnight was struggling to manage both her team and Addison. Her team took long
lunches and frequent sick days. Some told her that they were experiencing physical symp-
toms, such as headaches and nausea. McKnight knew that clients were also feeling confused,
especially when they were getting one answer from Addison and another from the team.
On one occasion, Addison asked McKnight to take three team members and begin
analysis for a new type of aftershave, telling her, “ If you do well, I will nominate you for the
MidState Researcher of the Year Award. ” She spent several days researching and planning
the effort. When she asked usually calm and cooperative staff member Kim Harbold for
assistance locating a journal article on chemical compounds, Harbold was less than help-
ful. At the next status meeting Harbold ’s unusual behavior became clear when Addison
announced that he was having Harbold, not McKnight, lead the aftershave project.
In response to this slight, McKnight built up the confidence to confront Addison, not
about the decision – Harbold was more than capable – but about how the decision - making
process was handled. When she requested a meeting, Addison replied that he only met
with staff after 6:00pm on Fridays. She canceled her usual “ girls night out ” to meet with
Addison. Her fellow team leads expressed even more displeasure than McKnight regard-
ing Addison ’ s “ office hours,” noting their displeasure at the conflict between their fam-
ily commitments and Addison’s schedule. That Friday, McKnight drove to headquarters,
arriving well before 6:00pm to allow time to catch up on paperwork. Finally, the appoint-
ed time came and went – Addison never showed up.
A dejected McKnight popped her head into Modell ’ s office; she and Modell had always
gotten along well, so she felt comfortable confiding in him. She explained her confusion
and frustration in dealing with Addison, “ I worked hard to earn my doctorate, putting
myself through graduate school, and I ’ve worked hard at MidState for over 10 years with
an excellent track record, yet he makes me feel like a child. ”
Modell presented a balanced perspective, noting that Addison had landed some really
big accounts and thus had considerable sway with the leadership team. However, Modell
also told her that he had been hearing the same thing from the other team leads and that
he would speak to Addison. Modell said that Addison was probably just tired and stressed.
McKnight went home relieved that Modell would take some action.
Rock bottom. That weekend, McKnight met a grad school buddy, Carlos Landy, for din-
ner. Landy, now a professor at the University of Massachusetts, was not surprised at all
to hear what was happening. “ Didn’t MidState check Addison’s references? ” he stated,
adding, “ When he was on the U. Mass faculty, he routinely talked down to his graduate
students and even promised the authorship on papers which he promptly ‘ forgot ’ about.
One of his students, Matt Light, a really promising researcher, was often the target of
Addison’s outbursts. Eventually, Matt had a psychological breakdown and hasn’t returned
to campus since, poor guy. ”
The following week, McKnight called Modell to find out the result of his meeting with
Addison. Modell told her, “ I set up a meeting with him on Tuesday but he never showed
c20.indd 383 6/17/09 2:54:30 PM
383 LEAD THROUGH VISION AND VALUES
up. There ’s really nothing I can do. We could never fi re him because we can’t replace him
to keep the contracts going – no one else on our staff has the contacts that he does. ”
The initial contracts that Addison brought in were soon coming to an end. Projects
were falling behind schedule, giving them little chance of being renewed. In his annual
forecasts, Addison promised continued growth, bragging about his high level contacts, but
emphasized that his “ incompetent staff of inexperienced, junior analysts ” made it diffi -
cult to do the work. McKnight began noticing a trend – first, one of her team members
left, deciding to relocate back to his hometown. Then, Thierry’s head scientist left for his
“ dream job ” at another employer in Chicago. A few more left after that, and then a few
more. Some expressed their frustration during their exit interviews, while others made no
mention of Addison’s behavior.
McKnight ran into Modell at headquarters one morning. “ This turnover is hitting us
pretty hard. I ’ m not sure I can take much more of Addison’s outbursts, let alone handle
him ignoring our analysis. Can we talk about some ways of dealing with Addison’s behav-
ior? ” Modell simply shook his head, “ He ’s the one who brought in the clients and you
want me to get him to change? ”
Ultimate impact. Over the next year, the turnover continued and morale plummeted.
Customers did not renew their contracts. Modell and the rest of the leadership team
took no steps to resolve the situation. Addison’s client base reduced to a handful of small
contracts.
About a year later, Addison resigned after a shouting match with MidState ’s director of
finance. McKnight took over the few remaining contracts. Over the next six months, she
managed to build up the contracts into a profi table niche. She then resigned when Modell
told her that she was not eligible for a promotion because Addison originally brought in
the customers.
CONCLUSION
In conclusion, discernible behaviors for leading through vision and values have
been shown to lead to effective outcomes. By understanding and applying these prin-
ciples, leadership skills can be enhanced.
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EXERCISES
Write a vision statement
Congratulations, you were recently selected as the recipient of the Entrepreneurial
Council for High Achievement ’s annual grant. You applied for the award almost a year
ago, detailing your academic and professional achievements, entrepreneurial experience
and aptitude, and undergoing a series of intensive interviews. Your efforts have paid off and
this is your opportunity to do what you have always wanted – run your own company.
With the award comes $ 10 million in venture capital backing to start your own profi t -
making venture. The investors prefer to stay in the background and let you do what you
do best, so you will be given complete autonomy to start any type of for- profi t company
you want. This initial round of funding could be supplemented with additional fi nancial
backing if your company does well in its early stages.
To begin your venture, you must begin by answering a series of questions about the
company that you will start. It may help to put some serious thought into creating a com-
pany that provides a useful product or service.
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387 LEAD THROUGH VISION AND VALUES
Carefully consider these questions and write a response to each one:
1. What are you passionate about? What really peaks your interest and gets your blood
fl owing?
2. What product or service could your company provide that is consistent with your
passion and interest?
3. How do you want others to see you and your company? When your employees are
hanging out at the water cooler, what will they say about you?
4. Prepare a draft for your company ’ s vision statement.
5. List at least 10 behaviors that you could carry out each day to live the vision.
Values comparison
The two cases, BB & T Bank and MidState Analytics, present drastically different company
value systems.
1. Identify the values displayed by each company.
2. Contrast the values. How are the two companies ’ values different from each other?
3. What results (e.g. company performance, customer retention, motivated and com-
mitted employees, turnover, morale) have occurred at each company?
4. Which set of values is more effective? Explain why.
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21
Foster Trust through Ability,
Benevolence, and Integrity
JASON A. COLQUITT AND SABRINA C. SALAM
*
Concerns about trust are woven into many aspects of working life. Encounters with new
co - workers, leaders, or followers are dominated by questions about trust, setting the tone
for future interactions. As relationships develop, trust serves as a guide that paces the
openness, investment, and spontaneity of the interactions between individuals at work.
As individuals navigate their way through hierarchical relationships, trust infl uences
decisions about whether to cooperate with directives at the risk of exploitation. Finally,
trust takes on a renewed importance in times of organizational crisis, as it can help main-
tain a sense of confi dence and optimism during tough times.
The academic literature defines trust as the willingness of a trustor to be vulnerable
to the actions of a trustee based on positive expectations about the trustee ’s characteristics,
behaviors, and intentions (Mayer, Davis, and Schoorman, 1995 ). When employees trust
their supervisors, they would be prepared to grant them influence over important issues
by, for example, disclosing sensitive or personal information (Mayer and Davis, 1999 ;
Schoorman, Mayer, and Davis, 2007 ). Note that trust in this example is not the actual
disclosing of the information; it is the psychological state that makes the employee willing
to do it. The disclosing of information represents risk taking, which can be viewed as one
behavioral expression of trust (Mayer et al., 1995 ).
The Oxford English Dictionary defines trust as confidence in, or reliance on, some quality
or attribute of a person. A number of qualities or attributes are capable of inspiring
trust in leaders. For example, research has examined attributes like competence, loyalty,
concern, consistency, reliability, honesty, openness, and value congruence (Butler, 1991 ;
Butler and Cantrell, 1984; Mayer et al., 1995 ). Research examines these attributes under
the heading of “ trustworthiness, ” grouping them into three distinct categories or concepts.
*
Editor ’s note: I regret to announce that Sabrina Salam died tragically in a car accident
on April 4, 2005.
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390 J ASON A. C OLQUITT AND S ABRINA C. SALAM
One of the three concepts is ability. If they want their followers to trust them, leaders must
know what they are talking about, meaning they must possess relevant job knowledge and
skills (Mayer et al., 1995 ). Only then will followers be confident that the leader ’s ideas are
worth taking seriously. Of course, ability is often domain specific (Zand, 1972 ). Actions
that reveal an expertise in one area (e.g. running the advertisement campaign for a new
product) do not necessarily signal competence in another (e.g. determining the overall
strategy for the entire organization).
The other two aspects of trustworthiness are less domain specifi c, refl ecting more on the
person and character of the leader. Benevolence entails the degree to which a leader has a
sense of goodwill toward followers, showing concern and loyalty to them for reasons that
are not egocentric or solely motivated by profits (Mayer et al., 1995 ). One could contrast
benevolent leaders with narcissistic leaders or Machiavellian leaders who simply want to
“ use ” people as a means to their own personal ends. This facet of trustworthiness is evi-
dent in good mentor – prot é g é relationships, where a dyadic bond exists that goes beyond
the formalized relationships refl ected in an organizational chart.
Integrity, the third component, captures the degree to which a leader adheres to sound
ethical and moral principles (Mayer et al., 1995 ). Leaders who have integrity keep their
promises, exhibit consistent actions and behaviors, and adhere to values such as honesty
and openness. Integrity also conveys an alignment between a leader ’s words and a leader ’ s
deeds (Simons, 2002 ). From this perspective, integrity can be gauged by asking whether
leaders “ do what they say they will do. ”
When discussing trust in leaders in organizations, what they most want to know is
how to increase trust within their units. If followers do not trust leaders, they react to
the leader ’s words with skepticism, spending time monitoring the leader, checking up
on them, and creating contingency plans in the event that things go wrong (Mayer and
Gavin, 2005 ). Such reactions amount to a “ distrust tax ” that can reduce the speed and
efficiency of the actions, behaviors, and decisions within organizational units (Covey,
2006 ). In addition, a sense of distrust can undermine the communication and coop-
eration within the unit while increasing the potential for the kinds damaging forms of
group conflict. With that in mind, this chapter focuses on using the concepts of ability,
benevolence, and integrity as a means of increasing trust.
THE BENEFITS OF TRUST
Before examining our focal principle in more depth, it is useful to review the importance
of trust within work units. That discussion will reveal that leaders should foster trust
within their work units because it leads to many beneficial outcomes in organizational life
(Colquitt, Scott, and LePine, 2007 ; Dirks and Ferrin, 2002 ). Those outcomes include:
Redefining the work relationship
The most effective work relationships involve employees who are willing to go beyond the
strict definitions of their work roles (Graen and Scandura, 1987 ). When a leader asks a
follower to “ go the extra mile, ” the follower has to have confidence that those efforts will
eventually be rewarded, despite the absence of any formalized schedule or agreement.
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391 FOSTER TRUST THROUGH ABILITY, BENEVOLENCE, AND INTEGRITY
Followers who trust their leaders are willing to engage in those extra actions because they
trust that their leader will eventually reciprocate (Blau, 1964 ). Put differently, they trust
that their leaders will, over the long term, engage in a fair exchange relationship (see
Chapter 14 of this volume for more on this issue). The end result of that trust is a work
relationship built on evolving role definitions and requirements rather than bureaucratic-
ally defi ned lists of job duties.
Creativity and innovation
Employees face other risks in their working lives, apart from the extra - mile sorts of behaviors
alluded to above. Among those risks is the decision to do their work in a creative and inno-
vative fashion. Being innovative and creative usually entails a greater danger of making
mistakes than following tradition. After all, novel ideas and solutions are not always
functional, and are not always accepted by an employee ’s peers. Despite those dangers,
followers may accept the risks involved in creativity and innovation if they trust in the
leader ’s ability, benevolence, and integrity. When followers view a leader as trustworthy,
they know he or she will not take advantage of honest mistakes in a manner that will
harm the employee.
Job performance
Trust enhances employee job performance for a number of reasons. Many employees
cannot perform their jobs at a truly effective level without the extra - role and risk - taking
behaviors that can be fostered by trust. However, trust also impacts an employee ’s ability
to focus on the task at hand (Mayer and Gavin, 2005 ). If employees are spending too
much time “ covering their backsides, ” worrying about politics, and drawing up contin-
gency plans, they will not be able to focus enough attention on their job duties. Even if
they can somehow remain focused on their jobs, the additional monitoring and backing
up chores will heighten their stress level.
Communication
The amount of trust that exists between a leader and a follower affects the communi-
cation between them, including the amount of information exchange and the accuracy
and efficiency of that exchange. Followers who trust their leaders will share facts and
information with them more frequently, and will be less likely to be guarded or secretive
in the information that is conveyed. The effectiveness of a work unit often depends on
followers being willing to share “ bad news ” without fears of “ shooting the messenger ” (i.e.
having the leader react punitively and destructively). Trust can enable candor, lessening
the likelihood that news will be “ spun ” in an inaccurate manner. Indeed, the ability of
trust to encourage undistorted communication and collaboration is especially important
in times of organizational crisis (Zand, 1972 ). Furthermore, distrustful employees may
even withhold good news, thinking in some way it will work to their disadvantage if others
somehow claim credit for it.
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392 J ASON A. C OLQUITT AND S ABRINA C. SALAM
Commitment to decisions
When a leader is successful in creating trust in employees, these employees are likely
to be more committed to decisions developed jointly with the leader and to decisions
made by the leader alone (Frost and Moussavi, 1992 ; Tyler and Degoey, 1996 ; Zand,
1972 ). Commitment to decisions is important in order to ensure their successful imple-
mentation. Many change programs in organizations, for example, fail because the major-
ity of employees do not trust the motives or do not know the reasons behind them, and
thus are not committed to them and do not implement the desired changes in their daily
work. Employees revert to the “ old way of doing things ” with the only difference that
they are now using, for example, more expensive tools and systems. Because trust encour-
ages commitment to decisions, developing greater trust in the leader encourages the
implementation of changes in the work unit.
Commitment to the organization
The reasons why employees leave an organization are very frequently related to their direct
superiors and the trust these employees develop toward their superiors. For example, whether
or not a leader follows up on promises made to the employee, whether or not a leader pro-
vides competent instruction to the employee, and whether or not a leader keeps promises
are all influential in a subordinate ’s decision to stay with an organization. Employees may
develop an emotional bond with trustworthy leaders (McAllister, 1995 ) or may feel a sense
of obligation to remain with them to further the organization’s work. Regardless of the
underlying reasons, retaining such employees is critical to avoid the expense associated with
turnover while protecting the knowledge and expertise of the work unit.
IMPLEMENTING THE PRINCIPLE
How can organizational leaders implement our focal principle by using ability, benevo-
lence, and integrity to foster trust? We will describe a number of actions that flow from the
top of the organization – as represented by its culture – down to the leaders themselves –
particularly in terms of their traits and skills. The importance of ability, benevolence,
and integrity may seem obvious, in hindsight, once leaders are told about the principle.
Nevertheless, many leaders fail to act in a trustworthy fashion, either because they lack
valuable aptitudes and skills, they are of poor moral character, they lack concern for the
employees, or they become distracted by the challenges they face on a daily basis. Besides
managing their followers, leaders need to monitor competitor movements, new product
developments, government regulations, and technical and process issues in their supply
chain. Because those challenges are numerous, organizations need to emphasize issues of
trustworthiness throughout their management and staffing decision making.
Create a culture of trustworthiness
Organizational culture is the shared values (i.e. what is important; see Chapter 20 , this
volume) and beliefs (i.e. how things work) that interact with an organization’s processes,
structures, and control systems to create behavioral norms (i.e. how things are done
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393 FOSTER TRUST THROUGH ABILITY, BENEVOLENCE, AND INTEGRITY
around here) (Uttal, 1983 ). Developing and maintaining the “ right ” kind of organiz-
ational culture is a complex process that depends on multiple factors. The founders of an
organization often set the tone for the culture, while actively managing staffi ng decisions
so that the right people are selected and promoted over time. The leaders in an organiz-
ation become the agent of that culture and therefore need to exhibit consistent actions
that model the beliefs and values reflected in the culture. After all, employees look to the
actions of the leader in order to understand the beliefs and values that are rewarded
in the organization. If leaders ’ actions and words are in conflict with one another, it is
likely that the actions will loom larger in the minds of followers than the words as they
seek to understand the “ true ” culture.
There are a number of organizational activities that leaders can undertake to create a
culture of trustworthiness in their organization. Probably one of the most crucial steps is
to communicate and formalize the ethical principles that underlie integrity by creating fair
and consistent procedures, and ensuring that adherence to those procedures is transparent
to every member of the organization. This can be aided through the involvement of at
least some of the affected and involved employees whenever an organization makes critical
decisions, plans activities, or initiates changes. Furthermore, the decision procedures that
precede and accompany any organizational changes should be communicated widely so
that employees can review these procedures whenever desirable.
Additionally, during the planning and implementation of any organizational changes,
employees should often have the opportunity to have a dialog with the decision makers
of the organization. This includes the opportunity to voice disagreements with organiz-
ational practices and the willingness of management to listen to disagreements. That sort
of exchange will give leaders the opportunity to highlight the ethical standards and busi-
ness considerations that have guided the organizational change and its implementation.
Without that level of two - way communication, employees may react based on mistaken
impressions that undercut perceptions of trustworthiness.
A culture of trustworthiness can also be created by emphasizing competence through-
out the organization. One of the first steps in such an effort is gaining a more complete
and valid understanding of the knowledge, skills, abilities, and other factors that are vital
to success in the various jobs in the organization. Extensive job analyses should be con-
ducted, with the results flowing into specific and accurate job descriptions. Unfortunately,
many organizations suffer from unclear roles and responsibilities, which lead to an unclear
definition of job functions. Colleagues, supervisors, or employees may develop distrust
towards particular individuals because they expect them to have skills in areas that are
not part of their job descriptions. Every member of the organization needs to understand
their own roles and responsibilities, and those of their colleagues.
Emphasizing competence within the culture also requires leaders to identify the incom-
petent behaviors of employees and demonstrate that such behaviors will not be tolerated
or rewarded in the organization. One means of accomplishing this goal is utilizing the
results of job analyses to inform the development and use of performance evaluation pro-
cedures (see Chapter 5 of this volume). That practice will ensure that leaders are knowl-
edgeable about what it means to “ do a good job ” in a particular area. In cases where
performance behaviors are not adequate, the organization’s training and development
programs need to be implemented in order to increase the right kinds of competencies
(see Chapter 4 of this volume). Such programs need to be comprehensive, long term, and
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394 J ASON A. C OLQUITT AND S ABRINA C. SALAM
available to all the employees who need them. Furthermore, a process needs to be in place
where the programs are continuously updated based on changes in the organization, the
market, relevant technologies, consumer demands, and so forth.
Increase leader ability
Having emphasized the importance of the larger organizational culture, we now focus
on the leaders themselves. A leader ’s trustworthiness can depend on both technical skills
and general managerial competencies. Technically speaking, a leader needs to possess the
competence, knowledge, and skills to perform certain actions and make certain decisions
in their area of expertise. That ability is needed for followers to accept leader decisions and
commit to them. Leaders therefore need extensive training in both technical and mana-
gerial skills. In addition to that training, leaders need to keep up to date with the most
recent developments in their area, committing to employee development and continuous
learning activities. This is something that is increasingly difficult given the high frequency
of innovations and changes in any business area. Of course, leaders who are high in
general intelligence will be more likely to attain and maintain high levels of technical
ability (see Chapter 1 , this volume).
Aside from their technical skills, however, leaders need to maintain high levels of
general managerial competencies. Those competencies include being able to plan a
career path with followers, setting the right kinds of goals with followers, evaluating fol-
lower performance accurately, providing coaching and development, and effectively
managing conflict within the unit. Those competencies also include interpersonal skills,
such as developing a knowledge and understanding of one ’s employees and their unique
abilities. In many units, these managerial competencies have a stronger impact on unit
performance than the leader ’s own technical skills.
Successfully managing ability levels requires leaders to show self - awareness and a
realistic judgment about their strengths and weaknesses. Overestimating one ’s ability
often results in failure, which can hamper the development of trust among followers.
Thus, leaders should demonstrate to followers that they know what they do (and do not)
know. It is a sign of objectivity to know when to ask for help and input in a particular task.
Leaders should strive to approach the followers who possess helpful knowledge and abilities
to solve a particular problem, admitting that they would not be able to accomplish this
task successfully alone. This sort of participative leadership can effectively capitalize on
the variations in information and competencies across followers within a work unit (see
Chapter 24 , this volume).
Build leader benevolence
Although followers can judge a leader ’s ability rather quickly and reliably, gauging a leader’s
benevolence requires more time and attention. One way to demonstrate benevolence
is to be supportive – to show concern for follower welfare, to consider follower needs,
and to help followers on work tasks when necessary (Mayer and Davis, 1999 ). Managerial
training can emphasize the importance of leader supportiveness, and relevant person-
ality traits could also be considered in the context of selection and placement decisions.
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395 FOSTER TRUST THROUGH ABILITY, BENEVOLENCE, AND INTEGRITY
For example, leaders who are particularly Machiavellian or narcissistic are unlikely to
engage in the kinds of behaviors needed to build a sense of benevolence.
Over time, continued demonstrations of benevolence can deepen the trust felt by a
follower for a leader. Eventually, the dyad becomes characterized by a mutual investment
of time and attention, and a mutual sense of fondness and respect. Role defi nitions
become broadened, with the follower willing to “ back up ” the leader if necessary, or “ stick
his/her neck out ” to support the leader (Graen and Uhl - Bien, 1995 ). Because it depends
on frequent demonstrations of goodwill and frequent interactions between the leader and
follower, this deepened sense of trust may only develop in a few select work relationships
(Lewicki and Bunker, 1995 ; McAllister, 1995 ). Still, if it does develop, it can serve as a
robust and long - lasting foundation for extra - role and risk - taking behaviors within those
relationships.
Demonstrate leader integrity
As with benevolence, gauging a leader ’s integrity can be difficult for employees in the early
days and weeks of a working relationship. One way for a leader to demonstrate integrity
is to show full consistency between words and deeds (Simons, 2002 ). In simple terms,
leaders need to keep their promises – to “ walk the walk ” , not just “ talk the talk. ”
Unfortunately, a number of factors can result in a disconnect between a leader ’s words and
deeds. For example, some leaders are too quick to revise their espoused values and
aspirations in response to fads, fashions, and changes. Those tendencies can result in a
sense of confusion on the part of followers, damaging leader credibility (Simons, 2002 ). Some
leaders are also too quick to make promises they cannot keep, which further undermines
credibility.
Another way for leaders to demonstrate integrity is to adhere to sound ethical principles.
Although a number of principles are relevant to integrity, principles of organizational
justice are particularly strong drivers of trust levels (for a review, see Colquitt, Greenberg,
and Zapata - Phelan, 2005 ). Procedural justice, for example, encompasses a number
of principles that describe how decision - making procedures should be structured (see
Chapter 14 of this volume). Such procedures should be accurate, consistent, unbiased,
correctable, and provide opportunities for employee voice and input. Whenever followers
see a leader engage in decision making – whether in the context of a hiring decision, a
performance evaluation, a conflict resolution procedure, or some other event – they can
gauge adherence to these principles as evidence of trustworthiness (Lind, 2001 ; Tyler and
Lind, 1992 ).
Other justice principles describe how procedures should be communicated and dis-
cussed with employees as decision making occurs (Bies and Moag, 1986 ). Interpersonal
justice encompasses two principles – that communication should be respectful and that
it should refrain from improper or prejudicial statements. Informational justice also
encompasses two principles – that communications should be honest and trustful and
that adequate explanations should be offered for key decisions (note that scholars have
debated whether it is appropriate to classify interpersonal and informational justice as
forms of “ justice ” per se – for more on that debate, see Locke, 2003 , Bies, 2005 , and
Colquitt, Greenberg, and Scott, 2005 ). When leaders speak to followers disrespectfully or
use derogatory remarks, followers will rightly question the standards and principles that
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396 J ASON A. C OLQUITT AND S ABRINA C. SALAM
guide leader behaviors. When leaders are dishonest about decision - making procedures,
or remain guarded and tight - lipped about their details, followers may similarly begin to
doubt or question the integrity and character of the leader.
Indeed, giving honest information may be particularly relevant to integrity because
honesty is so fundamental in discussions of trustworthiness (Butler, 1991; Butler and
Cantrell, 1984). Unfortunately, leaders are often reluctant to tell the truth. During times
of crisis and change, business leaders are often faced with the challenge of either telling
an uncomfortable truth, remaining silent, or downplaying the severity of the situation.
There are plenty of other situations in which, in the short term, it may be more comfort-
able not to tell the truth to followers. Ultimately, however, even dishonesty that was meant
to protect employee morale will eventually be exposed, undermining trustworthiness at a
time when commitment to the organization is most vital. Even concerted efforts at secrecy
can backfire, as employees may simply “ fill in the gaps ” in their understanding with there
own theories about the leader ’s behavior. Therefore, leaders need to take steps to explain
the true reasons for their decisions to those individuals affected by it, leaving less room for
negative interpretations of leader behavior.
EXCEPTIONS TO THE PRINCIPLE
Are there times when increasing ability, building benevolence, and demonstrating integrity
will fail to foster trust? Research has repeatedly supported the impact of the three trust-
worthiness aspects on employee trust (Colquitt et al., 2007 ). However, there are times
when taking steps to increase trustworthiness will have a weaker impact on actual trust
levels. Three factors comprise relevant exceptions to our focal principle.
Visibility of the leader ’ s behavior
Increases in ability, benevolence, and integrity will only result in increases in trust when
those efforts are noticed. For a follower to make an assessment of a leader ’s trustworthi-
ness, the follower must be aware of and familiar with the leader ’s actions and decisions.
Increasing the visibility of a leader ’s behavior is therefore necessary for the fostering of
trust. The leader can ensure visibility through frequent contact and exchange of infor-
mation with followers. Such contact can be face to face or through other means (e.g. tele-
phone, memos, e - mail, etc.). However, greater face - to - face contact leads to richer and
more high - quality information exchanges, which can only encourage the building of trust
(Salam, 1998 ).
When leaders communicate face to face rather than through other means, they are
able to convey information in greater detail, thereby preventing any misinterpretations
by followers. Moreover, face - to - face communication allows followers to ask for immedi-
ate clarification. This, in turn, may trigger further explanations of a situation by the
leader, which increases overall quality of communication. In this way, data that is rel-
evant to ability, benevolence, and integrity can be described, discussed, and explained.
Face - to - face communication also allows the leader to directly demonstrate competence
in a particular task and offer shows of support, both of which makes leader trustworthi-
ness more salient.
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397FOSTER TRUST THROUGH ABILITY, BENEVOLENCE, AND INTEGRITY
Personality of followers
Individuals differ in their tendency to trust others. Trust propensity is a personality trait
that affects the amount of trust an individual feels towards others (Mayer et al., 1995 ).
Individuals who are dispositionally trusting have a general belief that the words and
promises of others can be relied upon. Individuals who are dispositionally suspicious are
fundamentally skeptical of “ human nature,” doubting the trustworthiness of others as
a sort of default position. Trust propensity is an important factor that affects trust early
on in a relationship, before valid data on ability, benevolence, and integrity have been
gathered.
Negative personal experiences, where individuals learned that trusting others can
have adverse consequences, can lead to the development of a low trust propensity.
Similarly, positive experiences where trust has been rewarded can lead to a high trust
propensity. Early childhood experiences are particularly impactful to trust propensity,
as it is believed to be one of the first personality traits to develop within individuals.
National culture also has an impact, as some cultures have a higher general level of
trust propensity than others. Although this trait is difficult to change, experiences over
a long period of time that are incompatible with the existing disposition can lead to a
modifi cation of the trait.
An individual ’s trust propensity likely serves as somewhat of an anchor that binds
their trust around a particular level. If a leader takes steps to increase ability, build
benevolence, or demonstrate integrity, trust levels may adjust around that anchor. Still,
even large increases in trustworthiness may have minimal impact on individuals who
are dispositionally suspicious. Such individuals may react to such efforts with skepti-
cism, looking for hidden motives behind leader actions or alternative explanations for
the relevant changes.
Follower information processing
The development of trust depends on how the followers perceive their environment
and what attributions they make based on these perceptions (Kramer, 1996 ). Although
leaders might have an “ objective ” level of trustworthiness, trust depends on a personal
assessment of trustworthiness by the follower. In other words, while clear and visible
data about the leader ’s past and current actions may be available, the development of
trust depends on how the follower processes and interprets this information.
There is a large stream of research studying attribution theory (Weiner, 1974 ).
One lesson learned from this research is that cognitions and mental frameworks affect
what individuals perceive and the vast amounts of information relevant to social inter-
actions is interpreted. Theory and research on decision making also identifies how
individuals differ in their “ mental accounting ” (Kramer, 1996 ). For example, how certain
scenarios are framed is likely to affect the perceptions of trustworthiness in an individual.
Thus, aside from influencing what the follower knows about the leader ’s actions, a leader
can also influence how the follower processes that information by providing the appropri-
ate framing. For example, a particular set of actions may not immediately seem consistent
to an employee, until they are attuned to the common goal that those actions may have
been leading towards.
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398 J ASON A. C OLQUITT AND S ABRINA C. SALAM
CASE EXAMPLES
Below we provide real - life examples from businesses where trust has been a major issue deter-
mining the success of various endeavors. These examples illustrate how the principle explained
in this chapter can be translated into real business situations. The first case illustrates factors
that influence trust in interpersonal relationships while the second case illustrates factors that
influence trust at an organizational level.
Moving from a functional to a product - oriented structure
The maintenance department of a large European logistics and transportation company,
responsible for three products, used to be organized according to technical expertise. The
department had one director. Three functional managers reported to this director, with
their functions being mechanical, information technology, and hydraulics. Several technicians
and operators worked within each of the functional groups. This operational structure,
however, often functioned poorly in terms of cost and quality of service, so a new structure
was put in place. In this new structure, teams were organized around products, rather
than functions. Now the individuals reporting to the director were the expert technicians.
For the fi rst time in their career, technicians were given responsibility for an entire product
line and the management of a multi - functional team.
After six months of operation, the results varied widely between the teams, with none
of them functioning according to the outlined principles. The director was surprised at
the high degree of operating disparity between the teams, particularly because his trust
in the different team leaders was inconsistent with the actual performance of the teams.
Furthermore, within the teams, the atmospheres differed from being motivated and pro-
ductive to dissatisfied and demoralized. The explanation for this confusing situation lay in
the different types of behaviors the team leaders exhibited toward their supervisors and
subordinates – behaviors which impacted the perceived trustworthiness of the team leaders.
Product team 1 delivered the best results of all the teams. The director, however, was not
happy with the leader of product team 1. As a result, he did not trust the team leader ’ s belief
that the favorable results were going to last over the long term. Product team 1 ’s leader
had no experience whatsoever in writing management reports, and therefore avoided
submitting regular reports and communications to his director. That lack of management -
related ability led the director to form doubts about the leader ’s trustworthiness. Moreover,
the lack of communication itself harmed trustworthiness because the director received no
information that helped him attribute the positive results of the team to the team leader ’ s
ability. Furthermore, the director interpreted the lack of communication from the leader of
team 1 as a sign of low conscientiousness, harming perceptions of integrity.
Nevertheless, the members of product team 1 did develop high trust in their team leader.
The leader organized many occasions for communication and information exchange
within the team. Those actions fostered knowledge of one another, encouraged exchanges
of helpful information, and increased the support the team members gave one another.
Furthermore, the team leader did demonstrate high ability in the work content while pro-
viding team members with some decision - making power over their work. The leader also
utilized fair and consistent performance evaluations and demonstrated support and con-
cern for member needs. These actions fostered perceptions of integrity and benevolence,
making the leader appear trustworthy to the team.
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399 FOSTER TRUST THROUGH ABILITY, BENEVOLENCE, AND INTEGRITY
The performance of product team 2 was lower than that of product team 1.
Nevertheless, the director trusted the leader of product team 2. In the director ’s opinion,
it was only because of the leader that product team 2 achieved any good results at
all. This situation, where the director trusted the leader of product team 2 more than
the leader of product team 1, despite its lower performance, can be explained by per-
ceptions of trustworthiness. The leader of product team 2 provided regular and detailed
management reports to the director. Furthermore, the team leader frequently met with
the director formally as well as informally and told him about the work of the team. The
team leader told the director that the poor results of the team were due to the low per-
formance of the operators. Often, the team leader himself had to jump in and get the
operator ’s work done in order to compensate for their low performance. These actions
painted a favorable picture of the leader ’s technical and managerial abilities. In addition,
the leader demonstrated his integrity toward the director by honestly communicating to
him the problems of the team and by being willing to exceed his responsibilities by per-
sonally assisting in the team workload.
Within product team 2, however, the atmosphere had gone sharply downhill. The
operators in the team felt that the team leader unfairly provided all the bonuses to his
former colleagues, namely, the mechanics in the team. This fostered confl ict between
the operators and the mechanics and reduced trust between the operators and the leader,
and between the operators and the mechanics. The mechanics, on the other hand, felt
that their team leader rightfully evaluated them more favorably than the operators and
felt fairly treated. In addition, the leader spent more time coaching the mechanics than
the operators, resulting in differential perceptions about the leader ’s benevolence. These
differences created a clear division within the team. Moreover, the trust felt by only a
subset of the team ’s members was not enough to create high performance for the team
as a whole.
Product team 3 also demonstrated poor results. The results of the team were worse
than those of product teams 1 and 2. Nevertheless, the director trusted the management
capabilities of the leader of product team 3, revealing a further disconnect between the
director ’s assessment of leader trustworthiness and the actual performance of the three
teams. Again, however, the director ’s perception of the ability and integrity of the team
leader can explain the favorable impressions of the leader. The leader of product team 3
had great skills in monitoring performance and in writing very detailed and informative
reports. The leader was also very skilled in managing his budget, planning resources, and
in setting performance goals based on this monitoring system. The director greatly appre-
ciated this detailed information and demonstration of consistent management skills over
an extended time period.
Within product team 3, however, the atmosphere was very strained. All of the members
of the team were unhappy with their leader and had very low perceptions of his trust-
worthiness. This was clearly due to the leader ’s poor interpersonal, communication, and
coaching skills. He avoided communication with his team members whenever he could.
Furthermore, he was unable to provide valuable coaching, not only because he did not
communicate with the team members, but also because he was assigned a product he had
very little experience with. His members complained that the leader was a former member
of the information technology team, with little experience in producing this product. The
team leader was always in his office doing paperwork, preparing detailed work schedules
and charts to give to management, but never spent any time with his team members to help
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400 J ASON A. C OLQUITT AND S ABRINA C. SALAM
them accomplish their jobs. These actions led to doubts about the leader ’s mana gerial
abilities, while never creating the opportunity to build a sense of leader benevolence.
This case illustrates a number of principles. First, it shows the relevance of the ability,
benevolence, and integrity facets of trustworthiness in driving trust levels. Second, it shows
how difficult it sometimes is to judge trustworthiness. Both the director and the team mem-
bers were frequently operating off different data. The trust - relevant experiences that the
director could observe were different than the trust - relevant experiences that the team
members could observe. The director also prioritized different aspects of ability than the
team members. Taken together, these variations resulted in a disconnect in perceived trust-
worthiness between the director and the team members. Indeed, perceptions of trustworthiness
even varied within teams, with some factions perceiving favoritism that undermined integrity
whereas other factions felt that treatment was fair and just.
Managing organizational change
An international chemicals company had recently gone through the implementation of
an Enterprise Resource Planning (ERP) system. The purpose of implementing this tool
was to optimize the supply chain processes by having all of them based on the same kind
of information technology system. Through that system, the company hoped for greater
integration and a resulting increase in efficiency and productivity in its supply chain. A
few months after the implementation of this tool, however, none of the desired results had
been achieved. Processes were still ineffective and employees had to work with the new
tools, even though they were applying their old work approaches. Overall, morale was low
and employees developed greater and greater distrust in their management, doubting the
success of the ERP system implementation.
Detailed interviews with employees provided insights into why this low level of trust
had emerged. Employees did not understand why they had to go through this change and
therefore perceived the transition as something that was imposed on them by their lead-
ership team. This lack of perceived control made employees feel both unsupported and
unfairly treated, which in turn triggered doubts about leadership ’s benevolence and integrity.
The perception that this new system was imposed on employees was due to a lack of com-
munication from management explaining the need for a new information technology
system, and a lack of dialog with employees about the change.
The management team also neglected to inform and educate employees in how and
why their roles and responsibilities had changed with this new system being in place.
Management never explained to employees how the entire business process had changed
and what each employee ’s new part in the enterprise was going to be. That lack of infor-
mation, in turn, triggered perceptions that management itself did not know why it was
making these changes. As a result, employees doubted the implementation capabilities of
their leadership team, harming perception of the leadership team ’s ability.
All of these struggles were occurring in a larger context that lacked any vision or strategy
for employees – something desperately needed during hard and difficult times (see
Chapter 20 , this volume). Furthermore, employees felt that management was “ talking the
talk ” but not “ walking the walk. ” In other words, there was a great deal of discussion and
complaining from management about the problems that needed to be fixed, but none of
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401 FOSTER TRUST THROUGH ABILITY, BENEVOLENCE, AND INTEGRITY
this talk was followed up by action. That lack of alignment between words and deeds
further clouded perceptions of the leadership team ’s integrity, just as management ’ s own
struggles with the new system reinforced concerns about ability.
This case further illustrates how ability, benevolence, and integrity combine to infl uence
employees ’ trust in leadership. More importantly, the case reveals how the importance of
trustworthiness becomes magnified in times of organizational change. Change efforts
create a great deal of uncertainty and insecurity among employees, and those feelings
prompt employees to take a fresh, careful, and sometimes skeptical look at their work
environment (Lind, 2001 ). Any data that conveys questionable levels of trustworthiness
will be noticed and discussed among employees, restricting their trust at precisely the time
when management needs them to take risks by utilizing new methods or procedures. As a
result, leaders need to take extra steps to showcase their ability, benevolence, and integrity
during times of change.
CONCLUSION
Ability, benevolence, and integrity are the most critical facets of trustworthiness.
They foster a sense of trust in the leader by followers. Ability refl ects the knowledge,
skills, and aptitudes of a leader, in both technical areas and general management
competencies. Benevolence and integrity are aspects of the leader ’s character, and
require more time and attention on the part of followers before they can be reli-
ably judged. Benevolence reflects a desire to be considerate of the follower and can
be fostered by displays of concern and support. Integrity captures an adherence to
moral and ethical principles and can be fostered by aligning words with deeds and
adhering to standards of organizational justice.
When ability, benevolence, and integrity do combine to increase trust levels, a
number of beneficial outcomes can result. For example, followers are more likely to
redefine their work relationships, understanding that they can go beyond the boundaries
of their job description because they believe that their leaders will reciprocate in turn.
A sense of trust also allows followers to take the risks needed to engage in creative and
innovative behaviors. Job performance can benefit because employees are free to focus
on the tasks at hand, as opposed to worrying about monitoring, politics, contingency
plans, and “ covering one ’ s backside. ” High levels of trust also improve communication,
as followers feel freer to share sensitive information. Finally, trust increases follower com-
mitment to leader decisions while enhancing their desire to stay with the organization.
In order to increase trust, leaders need to take steps to increase their ability, build
their benevolence, and demonstrate their integrity. Leaders can do so on a follower- by-
follower basis, but can also take steps to create a culture of trustworthiness within their
organizations. Although such efforts will typically result in increases in trust, there are
some potential exceptions to that trend. First, leader behaviors must be suffi ciently
visible, otherwise followers will not be able to evaluate ability, benevolence, and integrity
levels. Second, followers’ trust propensities will anchor trust levels, as some followers
will be more dispositionally trusting or suspicious than others. Third, follower information
processing may create a disconnect between “ objective ” increases in trustworthiness
and follower perceptions of the leader ’s characteristics and behaviors.
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402 J ASON A. C OLQUITT AND S ABRINA C. SALAM
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EXERCISES
Appraising the trustworthiness of others
One valuable exercise for teaching students about trust requires them to consider how
they themselves weigh information on ability, benevolence, and integrity. Students should
try to think of a classmate or work colleague that fi ts each of the following profi les:
1. Particularly low levels of ability but seemingly acceptable levels of benevolence and
integrity.
2. Particularly low levels of benevolence but seemingly acceptable levels of ability and
integrity.
3. Particularly low levels of integrity but seemingly acceptable levels of ability and
benevolence.
After thinking about these three classmates or colleagues, students are asked to rate
how comfortable they would be turning over important duties and responsibilities to each
c21.indd 404 6/17/09 7:04:36 PM
404 J ASON A. C OLQUITT AND S ABRINA C. SALAM
one. Differences in that rating can then be used to explore the relative importance of the
three trustworthiness facets.
Reacting to trustworthy and untrustworthy leaders
Another valuable exercise asks students to consider their experiences with trustworthy and
untrustworthy leaders. Students are first asked to picture a leader that was particularly
trustworthy – having a particularly strong mix of ability, benevolence, and integrity. In
thinking about this leader, students should consider:
1. How did that high level of trustworthiness affect their motivation?
2. How did that high level of trustworthiness affect their tendency to take risks on
the job.
Next, students should picture the opposite sort of leader – an untrustworthy leader
with a particularly weak mix of ability, benevolence, and integrity. The same two ques-
tions should be considered in reference to that leader, in order to examine how trust-
worthiness impacts reactions to leadership.
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Part VII
ORGANIZATIONAL PROCESSES
c22.indd 406 6/17/09 2:56:18 PM
c22.indd 407 6/17/09 2:56:18 PM
22
Design Structure to
Fit Strategy
LEX DONALDSON
The organizational structure should be designed to fit the organizational strategy. This
is the Principle of Designing Structure to Fit Strategy – the meta - principle of effective
organizational structure.
This is a broad idea. However, following from this meta - principle, there are subprin-
ciples that turn the broad idea into useful prescriptive guidance. The principle of designing
structure to fit strategy is made specific and actionable by the subprinciples. By following
these subprinciples, organizations can build structures that maximize their effectiveness.
The structure of an organization is the set of relationships between its members, such
as who reports to whom on the organization chart, or whether there is a “ no smoking ”
rule. An organization coordinates the actions of its members in order to attain a goal
(Scott, 1992 ). The strategy of an organization is its intention for the future: how it will
attain its goals given its situation. The organization should adopt a structure that helps it
to attain its goals, thereby promoting organizational effectiveness.
The most effective structure for an organization is one that fits its strategy (Chandler,
1962 ). Strategy determines the levels of four contingency factors: organizational size, inno-
vation, diversification, and geographical diversity. These contingencies, in turn, determine
the nature of the tasks that confront members of the organization. Tasks can themselves
vary on two dimensions: uncertainty and interdependence (Donaldson, 2001 ). Task uncer-
tainty and task interdependence determine the mechanisms required to coordinate effec-
tively the tasks. These coordination mechanisms underlie the different types of structure that
are required to fit the strategy. The causal chain is: strategy, contingencies, task, coordi-
nation mechanisms, and structure. The discussion begins by outlining the coordination
mechanisms and then considers strategy, contingencies, and required structures. In clos-
ing, there are some case examples and exercises.
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408 L EX DONALDSON
COORDINATION MECHANISMS
Task uncertainty and coordination mechanisms
Each organizational member needs to know what he or she should do in order to accom-
plish his or her task, so that their task dovetails with that of those being performed by
other members. Coordination can be attained either by rule, plan, hierarchy, or mutual
agreement. Which of these coordinating mechanisms should be used depends upon the
level of task uncertainty. Task uncertainty is the degree of predictability that working in
a certain way will successfully accomplish the task. The coordination mechanism that is
most effective is the one that fi ts the level of task uncertainty.
Rules state what should occur in each specified situation. A rule states that, if X occurs,
then Y should be done, for example “ If an employee is 15 minutes late then he or she
will be fi ned one hour ’s pay.” Broadly understood, rules include standard operating proce-
dures and written instructions for performing the task. They are also present in computer-
ization and automation, and compose the software and hardware of these systems (Blau
and Schoenherr, 1971 ). Thus rules are really part of the programming of decisions. Any
particular case is decided by a framework that pre - exists that case. This allows the decision
to be made quickly, without reflection or discussion. There is no necessity for involvement
by a manager, so a member may simply follow the rule. A clerk can administer the rule.
Thus rules economize on managers and allow delegation to lower paid members (Blau
and Schoenherr, 1971 ). A rule applies the same across all cases, so that rules foster consist-
ency. This also means that rules treat every organizational member or client the same and
so can be perceived as fair and equitable. However, a disadvantage of rules is that, while
being a little more flexible than norms, they are still quite inflexible, in that, whenever X
occurs, then Y is prescribed – even though the situation may have changed so that Y is
no longer useful. Therefore, rules are appropriate where the task is low on uncertainty,
so that when they were set they correctly anticipated future situations (Galbraith, 1973 ).
Thus rules fit low task uncertainty.
Plans involve constructing a schedule of which member will do what and when.
Plans can be flexible by updating them periodically as the situation changes. In this way, plans
are appropriate where the task is less certain than for rules. Thus plans fit quite low task
uncertainty.
Hierarchy uses managers to direct activities of their subordinates. By exercising judg-
ment, managers achieve some flexibility in their decision making, but managerial involve-
ment is expensive because of their relatively high compensation and benefi t costs. Where
task uncertainty is medium then hierarchy should be used. Thus hierarchy fits medium task
uncertainty.
Mutual agreement means that members agree among themselves who will do what
and when. It relies upon the personal commitment of the members to the goals of
the organization, or at least to the accomplishment of their tasks. By participating in
decisions, members have increased understanding of what is required of them and tend
to be more committed. Participation, in so far as it leads to useful information exchange
(see Chapter 24 , this volume), tends also to increase the quality of the decision by using
the experience and initiative of members, and also saves the costs of supervision (Likert,
1961 ). However, mutual agreement has its own costs, in that it is a time - consuming
process, because members have to resolve at the start of each time period who is going
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409 DESIGN STRUCTURE TO FIT STRATEGY
to do what. Mutual agreement should be used where task uncertainty is high. High task
uncertainty makes it difficult for managers to know what is best, because of their limited
expertise. This tends to lead organizations to hire educated people, such as professionals,
who self - manage through mutual agreement (Hage and Aiken, 1970 ). Thus mutual agree-
ment fits high task uncertainty.
The subprinciples of task uncertainty are:
Tasks low on uncertainty should be governed by rules.
Tasks quite low on uncertainty should be governed by plans.
Tasks medium on uncertainty should be governed by hierarchy.
Tasks high on uncertainty should be governed by mutual agreement.
Task interdependence and coordination mechanisms
Task interdependence refers to whether two tasks are connected and, if so, how inten-
sively the tasks interact. The more intensive the connection between any two tasks, the
greater the coordination that is needed. To facilitate coordination, organizational subunits
that are more interdependent should be placed closer together in the organizational hier-
archy (Thompson, 1967 ). From the top of the hierarchy down, tasks are grouped accord-
ing to their interdependence with one another, which defines organizational subunits at
each level. At the top of the hierarchy, reporting to top management, are placed tasks that
have no direct interdependence on each other, such as divisions whose products are unre-
lated to each other (this is termed pooled interdependence). At the next level down in the
hierarchy are placed tasks that are moderately interdependent, such as where the prod-
uct made by the manufacturing department becomes the input for the marketing depart-
ment (this is termed sequential interdependence). At the bottom level in the hierarchy are
placed tasks that are highly interdependent, such as milling and boring operations in a job
shop, such that a product moves back and forth numerous times as it is fabricated (this is
termed reciprocal interdependence).
The subprinciple of task interdependence is:
The greater the interdependence between tasks, the greater their coordination needs to be and so the closer they
should be located in the organizational hierarchy.
Thus, the coordination mechanisms that should be used to structure an organization
are set by task uncertainty and task interdependence (Birkinshaw, Nobel, and Ridderstrale,
2001 ). The tasks of an organization are set, in turn, by its strategy, as will now be seen.
Thus strategy determines the tasks that determine the optimal structure.
STRATEGY AND CONTINGENCIES
At least five different strategies may be distinguished: differentiation, innovation, low cost,
market expansion and risk reduction. Strategy affects the organization on four dimensions:
size, innovation, diversification and geographical diversity. These four dimensions are
known as contingency factors because high organizational performance depends on fi tting
the organizational structure to each of them. Size is the number of people being organized;
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410 L EX DONALDSON
it relates to scale and is sought in a low - cost strategy. Innovation refers to materials, pro-
cesses or outputs that are new to the organization and is sought in innovation or differ-
entiation strategies. Diversification is producing services or products that are different
from each other; the more different the services or products, the greater the diversifi ca-
tion of the organization; it is sought in market expansion or risk reduction strategies.
Geographical diversity is having different localities operate independently of each other;
it is sought in market expansion or risk reduction strategies. Whenever an organization
alters its strategy this tends to cause changes in one or other of the four contingency fac-
tors, that is in the levels of innovation sought or size or diversification or geographical
diversity. Changes in one or other of these four contingency factors cause changes in
task uncertainty or task interdependence. In this way, changes in strategy indirectly
lead to changes in task uncertainty or task interdependence. Given that task uncertainty and
task interdependence require particular structures, strategy ultimately drives the structural
designs needed for effectiveness.
Specifically, increasing size decreases the uncertainty of many organizational tasks by
making them more repetitive, leading to formalization. Increasing innovation increases
task uncertainty, by requiring the solving of novel problems. Increasing innovation also
increases task interdependence, because the various functional departments, such as
research and manufacturing, have to interact to solve these novel problems. Increasing
diversification and geographical diversity decreases task interdependence, because the dif-
ferent products or services or localities operate independently of each other. A consider-
ation of each of these four contingency factors makes specific the organizational structures
required to fulfi ll the meta - principle that structure must be designed to fit strategy.
1. Size. The volume of work performed by an organization, such as the numbers of
products to be produced or customers to be served, affects the number of people required
to perform it and thereby the size of the organization (i.e. the number of its members)
(Blau and Schoenherr, 1971 ). In turn, organizational size determines the appropriate levels
of the structural variables of specialization, formalization, hierarchy, and decentralization.
SIZE AND SPECIALIZATION. Tasks need to be distributed among members so that each
specializes in a certain task. This is to avoid the confusion of everybody trying to do the
same thing at the same time, such as serving the same customer or operating the same
equipment. Specialization also has the advantage that a member can become more expert
in that task by repeatedly performing it. Also, for highly specialized tasks, their simplicity
allows them to be performed by members who have little education, experience, or train-
ing. This makes filling that role easier and allows lower pay. Thus the higher skill and
lower cost advantages of specialization promote organizational effi ciency.
The subprinciple of specialization is:
The larger size the organization, the more specialized should be the work of each member.
SIZE AND FORMALIZATION. Increasing size means that some tasks, such as hiring employees
or paying wages, are done repeatedly. Specialization also means that a member performs the
same task repeatedly. Such repetition increases familiarity with the task and so reduces
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411 DESIGN STRUCTURE TO FIT STRATEGY
task uncertainty. This allows the task to be codified in rules, regulations, and standard
operating procedures, which is referred to as formalization. Thus size increases formaliz-
ation which promotes efficiency because of the increased programming of decisions (as
discussed earlier). In contrast, an organization that fails to increase formalization as it
grows in size, is relying on more costly forms of coordination, such as the managerial
hierarchy and so is being ineffi cient.
The subprinciple of formalization is:
The larger size the organization, the more formalized it should be.
SIZE AND HIERARCHY. The height of the hierarchy is affected by the span of control, that
is, the number of members who are direct subordinates of each manager. As organiz-
ational size increases, the span of control increases for a manager until it becomes too
wide. At this point a new intermediary level has to be introduced into the hierarchy
between the manager and his or her erstwhile direct subordinates. In this way, size leads
to an increase in hierarchical levels, in order to avoid the breakdown in coordination that
would occur if spans of control were too wide.
The subprinciple of hierarchical levels is:
The larger size the organization, the more hierarchical levels it should have.
SIZE AND DECENTRALIZATION. Larger size promotes decentralization. Larger number of
members and customers increases the number of issues requiring managerial decision.
Thus size increases organizational complexity. This complexity means that decisions
cannot all be centralized, so that decentralization must increase as complexity increases.
Decentralization means that some decisions are taken at levels down from the top of the
hierarchy. The more decisions that are delegated and the further down the hierarchy
they are delegated, the greater is the decentralization. This means that some decisions
are being taken by lower- level managers who have more knowledge of the local situation,
avoiding delays and also the distortions that would occur if all information had to be fed
up the hierarchy for centralized decision making. Moreover, decentralization gives lower-
level managers some degree of autonomy that helps involve and motivate them.
However, size increase really substitutes direct control of organizational members (i.e.
centralization) by indirect control through formalization (e.g. rules) (Child, 1972 ). Hence,
the increasing decentralization that follows from size increase is not “ empowerment ”
which would be giving organizational members more autonomy and freedom from organ-
izational constraints. Instead, in decentralization, middle - and lower- level managers gain
discretion to make choices, but are limited in that, in making those choices, they must
follow standard procedures and organizational policies, and the managers are subject to
reporting up the line about what choices they have made (Child, 1972 ). For instance, a
manager may hire a new employee into his or her department, but in so doing may have
to fill in a form for the human resource management department, and work within an
establishment of only certain positions being allowed for the department, be subject to
complying with the organization’s EEO policy, and have the demographics of his or her
department reported annually to the organization’s EEO staff unit. Thus, the manager
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412 L EX DONALDSON
has some choice (autonomy), but it is constrained by organizational formalization, so it is
not a completely free choice (Blau and Schoenherr, 1971 ).
The subprinciple of decentralization is:
The larger size the organization becomes, the more it should decentralize decision making.
In sum, as an organization grows larger so it should increase its specialization, formaliz-
ation, hierarchical levels, and decentralization.
2. Innovation. A high rate of innovation means that, within a time period, there are a
large number of outputs or processes that are new to the organization. The opposite of
innovation is routine operation, which leads to low task uncertainty, which, as seen, is
effectively organized by rules set by the hierarchy. Also, knowledge is centralized at the
top of the organizational structure, so that decisions about other, medium uncertainty
tasks can be taken centrally. This kind of organizational structure, which features high
formalization, centralization and psychological dependence of members on the hierarchy,
is referred to as a mechanistic structure. Mechanistic structures are effective for routine tasks,
especially low uncertainty tasks (Burns and Stalker, 1961 ).
In contrast, innovation requires that novel problems be solved. This often requires
hiring technical experts or professionals and encouraging them to use their initiative,
based upon a broad understanding of their task or the organizational mission. Such
organizational members tend to coordinate through mutual agreement. Knowledge is diffused
throughout the organizational structure, thus rendering ineffective a high degree of centraliz-
ation. This kind of organizational structure, which features use of initiative by members,
mutual agreement, decentralization and also low formalization, is referred to as an organic
structure (Burns and Stalker, 1961 ). Organic structures are effective for high uncertainty,
innovatory tasks.
Organizations that wish to innovate (i.e. pursue a “ prospector ” strategy) have higher
performance if they adopt the organic structure, whereas organizations that do not and
emphasize cost control (i.e. pursue a “ defender ” strategy) have higher performance if they
adopt the mechanistic structure ( Jennings and Seaman, 1994 ). There is a continuum of
organizational structures running from highly mechanistic through to highly organic, with
many organizations lying at intermediary positions. Correspondingly, organizations vary
in the level of their innovativeness. The more innovative the organization wants to be, the
more organic its structure has to be. For an organization to adopt the degree of “ organic -
ness ” that fits its level of task uncertainty, its managers need to know that optimal struc-
tures are contingent, rather than there being a “ one best way,” i.e. a uniform structure
that fits all organizations regardless of their varying contingencies (Priem and Rosenstein,
2000 ).
The subprinciple of innovation is:
The greater the innovation rate sought, the more organic the organizational structure should be.
Within an organization there can be variations in the level of organic - ness from depart-
ment to department or section to section. These stem from variations in the uncertainty
of the tasks being performed by each department. For example, manufacturing is often
mechanistic, because much of its work is repetitive, whereas research is usually organic,
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413 DESIGN STRUCTURE TO FIT STRATEGY
because its work is solving novel problems (Lawrence and Lorsch, 1967 ). Thus, far from a
homogeneous organizational culture, the organization contains divergent subcultures.
The subsubprinciple of innovation is:
The greater the task uncertainty of any organizational subunit, the more organic it should be.
Nevertheless, despite such differences between departments in the same organization,
where one department is interdependent on another they must achieve coordination.
COORDINATION MECHANISMS FOR INNOVATION. Innovation affects the mechanisms that
should be used to coordinate the functional departments of an organization, through the
effect of innovation on task uncertainty and task interdependence.
Where the organization does not wish to innovate, then there may be no research
department. The task interdependence between functions may be of the low intens-
ity, simple, sequential kind: the sales department places an order on the manufacturing
department, which makes it and passes it onto the delivery department. The coordination
mechanism that is required for sequential task interdependence is planning, because there
is limited task uncertainty. The uncertainty that exists mainly arises from variations in
throughput volume over time. Where plans cannot be used because of more uncertainty,
coordination can be achieved through use of hierarchy.
In contrast, where the organization wishes to innovate, then there will usually be
a research department. The task interdependence between functions will be of the
highly intensive, reciprocal kind. The research department may have an idea for a
new product, but the marketing department must examine the demand and price, and
the manufacturing department must examine the feasibility and costs. Therefore a dis-
cussion needs to occur back and forth between the functional departments. Because
the content and interactions involved in these discussions are uncertain, planning can-
not be used and hierarchy does not suffice. Each department must adjust to the other
and so their coordination is ad hoc and through mutual agreement (Thompson, 1967 ).
The discussion is made more difficult by the subcultural differences of style, language,
timeframes, and values between the departments. The organization should create
interfunctional teams to bring representatives of the functional departments together
to facilitate cooperation. These teams may further be assisted by integrators who can
act as facilitators. Inevitably, conflicts arise between the different perspectives of the
functions and these should be resolved by open confrontation, that is, problem - solving
discussion, rather than by using power or being evasive (Lawrence and Lorsch, 1967 ).
The subprinciple of interdependence is:
Where innovation is not required, interdependence between functional departments should be handled by
planning through the hierarchy. Where innovation is required, interdependence between functional depart-
ments should be handled by cross - functional teams, facilitated by integrators and resolving confl ict through
confrontation.
3. Diversifi cation. If the organization is undiversified (e.g. it produces a single product),
then its tasks are interdependent – manufacturing makes what research designs – and so
the main organizational subunits are functions. Thus an undiversifi ed organization should
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414 L EX DONALDSON
have a functional structure. Increasing diversification, by offering more diverse products
or services, decreases the interdependence among the tasks of creating and selling each
of these different outputs. If an organization is diversified, for example producing both
automobiles and shoes, each of these two products is unrelated and so will have its own
separate resources to design, make, and sell them. Such decreasing task interdependence
reduces the amount of coordination of tasks and supervision required. These tasks that
are not interdependent become the primary building blocks of the organization and so are
placed at the top of the hierarchy. Thus a diversifi ed organization should have a divisional
structure. Hence diversification reduces task interdependence and so requires a shift from
a functional to a divisional structure.
Divisionalization increases decentralization, so that the diversification that causes division-
alization also indirectly leads to more decentralization (in addition to that caused by size).
Typically, operational decisions are decentralized to the divisions, while strategic and
major financial decisions remain centralized. A division has a complete set of operat-
ing resources and functions to design, make, and sell the product or service, so that the
division can act autonomously from the rest of the organization. Therefore, informa-
tion processing about the product and its environment can be mainly confined within the
division. This reduces the need for most of the information about the product to fl ow to
levels above the division, thus relieving the head office of work. In essence, where there
are no synergies to be extracted from the operating divisions, then the corporate head
office should play a minimal role. This role is confined to work such as supervising the
managers in charge of the divisions, resource allocation across divisions and managing
corporate strategy (e.g. acquisitions and divestments). Thus the creation of autonomous
divisions constitutes a significant increase in decentralization for the organization. Also,
because the division operates independently of the other divisions, its performance can be
assessed in terms of its profitability and the divisional manager rewarded on the basis of
the profi tability of his or her division.
The highly decentralized divisional structure, however, only fits high diversifi cation,
that is, low task interdependence. In such a case, the products or services of the divisions
are unrelated, that is, they have nothing in common: materials, technologies, distribu-
tion, or customers, etc. However, many companies are only medium diversified, that is,
they have related products or services (Whittington, Mayer, and Curto, 1999 ). The less
diversified the company, that is, the more related its products or services, the greater their
interdependence, that is, through sharing materials or technologies, etc. This interdepend-
ence between divisions requires coordination, so such divisions are less autonomous than
in the highly diversified case (just discussed). Consequently, the corporate head offi ce is
larger, contains more operating functions, and centralizes more decisions. For example, in
a company making a related set of electronics products, some technology is in common
across the product divisions, so research on it is conducted in a central laboratory, swell-
ing the number of the staff in the corporate head office (Pitts, 1976 ). The corporate head
office should identify activities in common across the divisions and set up central func-
tions to provide expertise to the divisions and foster distinctive corporate competences,
for example a central staff group with expertise in manufacturing (Goold, Campbell, and
Alexander, 1994 ).
Another kind of relatedness between products is the vertically integrated company, for
example forest products, in which huge volumes of material pass from division to division
c22.indd 415 6/17/09 2:56:20 PM
415 DESIGN STRUCTURE TO FIT STRATEGY
down the value added chain. These product flows need coordinating, so that divisional
autonomy on production rates is curtailed and the corporate head office contains special-
ists in production planning and transportation (Lorsch and Allen, 1973 ). In essence, in
related product or service organizations, there are operating synergies to be extracted
from the divisions through their coordination and this entails a more “ hands - on ” role for
the corporate head office. Also, the managers in charge of the divisions are rewarded for their
contribution to corporate profi tability, not just the profi tability of their division.
If a company diversifies from medium to high levels of diversifi cation, by having
products (or services) that are unrelated rather than related, it should adopt the fully
decentralized type of divisional structure, with high autonomy of divisions under a
small head offi ce.
The subprinciple of diversifi cation and divisionalization is:
As the organization increases diversification, the organization should divisionalize and use progressively
more decentralization, and there should be a smaller head office with fewer operating functions, performance
assessment of subunits by profits rather than costs, and rewards for divisional managers based more on
the performance of their division than of the corporation.
As seen, at low levels of diversification the organization should use a functional struc-
ture, whereas at high levels of diversification the organization should use a divisional
structure. However, at medium diversification there is a choice of either functional or
divisional structures. Medium diversification is where there the products or services pro-
duced are related to each other in some way, such as common materials or technology or
skills or customers, etc. If the organization is structured functionally then the resources are
managed in an integrated way, such as by a central manufacturing department that fosters
economies of scale in purchasing and manufacturing. However, the focus on products or
services and their markets is blurred, which impedes innovation and customer responsive-
ness. Hence a functional structure should be chosen where the medium diversifi cation
organization wishes to minimize costs, such as where it faces severe price competition.
Conversely, if the medium diversification organization is structured divisionally, then
there is strong focus of each division on each of its products or services and their mar-
kets. This fosters responsiveness to customers. Moreover, because each division has a com-
plete set of functions, interaction among them is facilitated, thus boosting innovation.
Responsiveness and innovation, in turn, enhance sales growth. However, the resources
are scattered and duplicated across the divisions and not managed in an integrated way,
so potential economies of scale in purchasing and manufacturing are sacrifi ced. Hence,
a divisional structure should be chosen where the organization wishes to maximize inno-
vation and sales growth. Thus there is a tradeoff, so that the medium diversifi cation organiz-
ation chooses to maximize either cost control or sales growth, while sacrificing the other.
The subprinciple of tradeoff for medium diversifi ers is:
Medium diversified organizations should choose a functional structure where cost control is the main goal and
a divisional structure where sales growth is the main goal.
Much organizational change today in large divisionalized corporations is reorganiz-
ation of the boundaries of divisions, or “ patching ” (Eisenhardt and Brown, 1999 ), whereby
c22.indd 416 6/17/09 2:56:20 PM
416 L EX DONALDSON
units are acquired or divested by a corporation, or combined in a division or split into
separate divisions (Karim, 2006 ). Many of these changes are compatible with the logic of
building larger divisions to achieve economies of scale, or creating more tightly focused
divisions to attain innovation and sales growth (Karim and Mitchell, 2000 , 2004 ).
Furthermore, the strategy of an organization may be low - cost mass production for an
existing product (or service), while simultaneously pursuing the innovation of developing
and launching a new product (or service). Then the organization should adopt the “ ambi-
dexterous organization ” structure (O ’ Reilly and Tushman, 2004 ). The existing mass - produced
product should be run mechanistically to reap cost savings, while the new product
should be run organically to maximize innovation and minimize development time. To
facilitate these different substructures, they should be structurally separated, by making
each a division. Greeley Hard Copy (itself a subunit of Hewlett - Packard) did so by split-
ting off its new, portable scanner product into a separate division from its existing fl at bed
scanner division (Tushman and Radov, 2000 ). Similarly, USA Today split off its new, online
news service into a separate division from the existing newspaper, in order to develop the
online news concept. Thus, the subprinciple that medium diversifi ed (i.e. related products
or services) companies should divisionalize to innovate, applies even if only one of the
divisions is innovatory.
Some medium diversification organizations may wish to avoid the extremes of maxi-
mizing cost control or sales growth and instead may wish to compromise and have some
cost control while attaining some innovation and customer responsiveness so as to attain
moderate sales growth. They can retain both functional and product or service structures
with equal emphasis by adopting a matrix structure of the functional - product or functional -
project or functional - service types. Functional managers coordinate the common issues
across the related products or services. A subordinate reports simultaneously to a func-
tional manager and also to the manager in charge of a product or service. For example,
the functional - project matrix of the Lockheed - Georgia Division of the Lockheed Aircraft
Corporation features a manager for each function (e.g. engineering) and also a manager
for each project, that is, airplane type, with subordinates reporting to both. The func-
tional managers seek to control costs by optimizing the use of resources in an integrated
way across projects, while the project managers facilitate interaction within their tempor-
ary teams (drawn from the functions), to speed innovation and to interface with their client
(Corey and Star, 1971 ). In the contemporary era, a quite frequent type of organizational
redesign in large corporations is the formation of additional teams, such as for projects, to
create matrix structures or to make existing matrix structures more elaborate (Galbraith,
2001 ).
The subprinciple of compromise for medium diversifi cation is:
Medium diversified organizations should choose a functional - product matrix structure where both some cost
control and some sales growth is the goal.
While corporate head offices should be smaller and less interventionist where prod-
ucts (or services) are unrelated, this does not mean that they should never intervene in the
divisions. On the contrary, corporate head offices can and should intervene in divisions
when divisional performance is unsatisfactory. This applies not only for corporations with
unrelated diversification but also for corporations with related diversifi cation or vertical
c22.indd 417 6/17/09 2:56:20 PM
417 DESIGN STRUCTURE TO FIT STRATEGY
integration. When divisional performance is unsatisfactory, the corporate head offi ce may
intervene by criticizing divisional managers, cutting their budgets or bonuses, demoting or,
at the extreme, firing them. The presence of a vigilant head office may provide a deter-
rent, so that divisional managers are “ kept on their toes, ” without low divisional perform-
ance and sanctioning by the head office actually needing to occur (Goold et al., 1994 ).
Corporate head offices adding value to divisions in such ways is referred to as corporate
“ parenting. ”
Other ways of corporate “ parenting ” include strategic planning, in which the head
office discusses the details of the division’s future activities (Goold et al., 1994 ). This is
most feasible in corporations where the products (or services) are related, because
the head office can become knowledgeable enough about the divisions to add value in the
planning process.
Where a company is diversified, containing multiple business firms, yet the company
has been unable to achieve synergies between them and has, instead, stifl ed their freedom,
a new corporate parent may acquire the company and break it up, selling the divisions off
for a higher price than paid for their combined acquisition (Sadtler, Campbell, and Koch,
1997 ).
For a company to successfully “ parent, ” it should acquire firms that lack some compe-
tency that the parent has, while divesting any division that it cannot parent because it does
not have a complementary competence the division lacks. Moreover, the parent should
seek, over time, to develop some distinct competence that other “ parenting ” corporations
lack, so that they are not rivals for the acquisition of the same “ children ” fi rms (Campbell,
Goold, and Alexander, 1995 ).
4. Geographical diversity. Geographical diversity is another way to reduce task interdepend-
ence. Each locality has its own complete set of resources and functions to design, make,
and sell its product or service in its locality, so that it operates independently of other geo-
graphical areas of the organization. In this way, diversification along geographical lines
can produce autonomous divisions, similar to product or service diversification; only the
divisions are defi ned by locality.
The subprinciple of geographical diversity is:
Where each locality operates independently of other localities then the structure should be geographical
divisions .
In some multinational organizations, such as Unilever, the geographical areas oper-
ate quite autonomously, but the corporate head office sees that there are linkages made
between them to share knowledge that is relevant across the world, such as new products,
technologies, or advertising (Goold et al., 1994 ). Geographically diverse firms should reap
all possible synergies between their geographical areas by creating conferences and net-
works for such knowledge sharing.
In some organizations their geographical diversity is at the medium level, so that there
are significant differences between geographies, warranting a separate manager for each,
while diversification is also medium, so that there also are signifi cant differences between
products, warranting a separate manager for each. Moreover, the activities of the products
c22.indd 418 6/17/09 2:56:21 PM
418 L EX DONALDSON
are distributed across the geographies in such a way that each product manager is coor-
dinating his or her product across the geographies. Thus there will be both several geo-
graphical locality managers and several product managers. Each of their subordinates
reports simultaneously to the managers of their geography and of their product. Hence
the structure is a geography – product, or area – product, matrix (Davis and Lawrence, 1977 ). A
frequently encountered example is the multinational corporation that has more than one
distinct product or service, but which also produces and sells each of them in numerous
different areas of the world (Galbraith and Kazanjian, 1988 ). For instance, geography –
product matrix structures are found in German multinational corporations that have both
substantial geographical and product diversity (Wolf and Egelhoff, 2002 , 2007 ). They pro-
vide the additional information - processing capacity required to cope with these simultane-
ous challenges.
The subprinciple of medium geographical diversity and medium diversifi cation is:
Where there is a medium geographical diversity and medium diversification, then the organization should
have a geography – product matrix structure.
This chapter has emphasized the need to fit structure to several different aspects of
strategy (size, innovation and diversification, and geographical diversity). A misfi t of any
of the corresponding structural dimensions (e.g. specialization, centralization) to any of
these four contingencies will reduce organizational performance. Thus suboptimal organiz-
ational designs could arise from numerous sources and multiple misfits could exist in an
organization (Donaldson, 2006 ). However, much of the reduction in performance comes in
practice from only one single misfit in an organization, namely, the largest misfit, that is, the
structural dimension that most misfits its contingency (Burton, Lauridsen, and Obel, 2002 ;
Klaas, Lauridsen, and Hakonsson, 2006 ). Hence, if managers and consultants identify
which is the greatest strategy – structure misfit in their organization, then fixing it, by adopt-
ing a fi tting structure, will attain most of the potential benefi t from organizational redesign.
In that sense there is “ low hanging fruit ” waiting to be plucked. This should encourage
managers and consultants to seek to fit strategy to structure. To do so, they should not be
afraid to ask many questions (Goold and Campbell, 2002 ), so that they consider systemat-
ically each of the aspects of structure and their corresponding structural dimensions.
In some situations, there may be an industry norm about structure that would make
the organization more acceptable if it adopted a structure that conformed to the norm.
Where this structure fits the organization’s strategy, then the benefits of acceptability add
to those of operational effectiveness. Where this structure misfits the organization’s strat-
egy (Donaldson, 2008a ), the loss in acceptability from not adopting the popular structure
may be worth less than the benefit in operational effectiveness from fitting the structure to
strategy, making the latter the more optimal choice (Donaldson, 2008b ).
CASE EXAMPLES
To understand more fully how these principles work in practice, consider first a positive
example and then a negative example.
c22.indd 419 6/17/09 2:56:21 PM
419 DESIGN STRUCTURE TO FIT STRATEGY
Product development at Toyota
Product development is sometimes supposed to be synonymous with an organic structure.
However, this presumes that the products being developed are highly innovative, based on
the creation of new science or technology, so that task uncertainty is high. In contrast, at
Toyota Motor Corporation product development is evolution not revolution. Thus prod-
uct development involves only moderate levels of task uncertainty, so that mechanistic ele-
ments are appropriate as well as organic elements.
Toyota mass produces high - quality, reliable automobiles, yet it is mostly not a lead-
ing edge innovator. As a high - volume automobile company, it faces tough cost pressures
due to global competition. Hence, new product development at Toyota seeks to create
new models that are easily manufactured to tight costs and which share as much as poss-
ible across models in the range. This standardization has helped Toyota to introduce new
models, and even some new products, thus “ competing in time. ” Thus, while there is some
degree of task uncertainty, it is moderate rather than high.
Each feature of the product development process at Toyota (Sobek, Liker, and Ward,
1998 ) can be coded as to whether it is mechanistic or organic. Toyota features strong
functions both for manufacturing and product development (mechanistic). Engineers
remain in one or other function for most of their careers, so that, while they are rotated,
it is within one of these functions (mechanistic), not between functions. There is a lengthy
process of in - company training and on - the - job experience over many years before engi-
neers rise to the higher levels where authority is vested (mechanistic). Younger engineers
are closely supervised and mentored by their superiors (mechan istic), though the style is
Socratic rather than directive (organic). Ongoing cross - functional coordination is provided
by meetings (organic), but the extent of these is constrained in number and scope so that
engineers can get on with their work.
There is considerable use of written documents (mechanistic). There are detailed,
written standards for every part of the automobile (mechanistic). These are frequently
updated by the engineers. Being written, they codify the knowledge, so that it is held
by the company (mechanistic), not just by the individual. Meetings often work through
detailed, written checklists. Requests for changes from one section to another are writ-
ten and circulated prior to meetings. The decision of the meeting is then written up
to record it formally (mechanistic). These documents conform to a standard format
(mechanistic). Younger engineers are coached as to how exactly to write these docu-
ments and how to conduct the meetings (mechanistic).
There is cross - functional coordination provided by a chief engineer who leads the
project and stands outside the functions (organic). However, the engineers working on
the project remain in their functions, subject to the authority of their functional boss
(mechanistic). Hence, the project leader lacks line authority over the project and has to
work by persuasion (organic). The credibility of the chief engineer rests in part on his
engineering expertise and he is regarded not so much as the project manager but as the
lead designer (organic). There is a considerable amount of conflict involved, so that issues
are thoroughly discussed (organic), rather than being settled forcibly or evaded.
Thus there are both mechanistic as well as organic elements in the organizational
structure that is used for product development at Toyota, thereby fi tting its strategy.
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420 L EX DONALDSON
Product divisions at Nipont
Nipont (a pseudonym for a real Japanese corporation) had a functional structure.
However, as it grew and diversified the range of its product offerings, Nipont replaced
the functional with a divisional structure, following the pattern of most large corporations
(Rumelt, 1974 ). It hoped that product divisions would offer greater flexibility and speedier
response to each different product market, so as to boost innovation and attain faster sales
growth. In the booming markets of the time this seemed appropriate. However, shortly
after the adoption of the new divisional structure the environment changed in a way that
made its divisional structure inappropriate.
International events led to a dramatic rise in the cost of oil, a major raw material, so
placing pressure on Nipont ’s costs. This was compounded by increased competition from
international competitors, who “ dumped ” their product into the Japanese home market at
marginal cost, so placing pressure on prices. Squeezed by cost and price pressures, Nipont
had to bring their costs under control. Unfortunately, Nipont ’s divisional structure was
unsuited to providing tight cost control.
The divisional structure at Nipont consisted of three product divisions: the Chemicals
Division, Fibers Division, and Plastics Division. Each division operated autonomously
making their own decisions. However, in strategic terms, while Nipont was a diversifi ed
company, it was a company of only medium diversification, because its products were
related. There were strong links between its three main products, that is, substantial task
interdependence. Fibers were the main product and were made by the Fibers Division.
These are synthetic textiles that use materials made by the company, in common with
the second main product, plastics, made by the Plastics Division. Much of the chemicals
sold by the Chemicals Division were in fact by- products of the core processes used for the
Fibers and Plastics Divisions.
Moreover, many of Nipont ’s production plants made more than one of these products.
Two plants (Mishima and Nagoya) made products for all of the three product divisions. Other
plants (Gifu and Shiga) made products for two of the product divisions. Therefore
these plants were not under a unified command. The other plants each reported to their
product division, so that control was split among the three product divisions. Therefore
there was a lack of overall coordination of the company ’s production plants – despite their
operations being interconnected. Thus there was no central control over manufacturing,
sacrificing economies of scale. In a buoyant economy this had been a highly acceptable
tradeoff for the better fl exibility and innovation potential offered by organization into sep-
arate product divisions. However, it became unacceptable as the environment forced the
organization towards reducing production costs. After a few years, Nipont reverted to a
functional structure (Donaldson, 1979 ).
Given that the environments of organizations are frequently changing, this can lead
them to alter their strategies, and they must then quickly change their structures in order
to avoid misfi t and ineffectiveness.
CONCLUSION
Managers should design their organization so that its structure fits its strategy.
Strategy in turn sets the levels of four contingency variables – size, innovation,
c22.indd 421 6/17/09 2:56:21 PM
421 DESIGN STRUCTURE TO FIT STRATEGY
diversification, and geographical diversity – that each affects the tasks in the organiz-
ation and therefore the required structure.
A small organization should use a structure that is low on specialization and
formalization, and has a flat hierarchy and centralized decision making. A larger
organization should use a structure that is higher on specialization and formaliz-
ation, and has a taller hierarchy and more decentralized decision making.
Innovation entails more solving of novel problems and task uncertainty is higher,
so that the organization should adopt a structure that relies less on rules, plans, and
hierarchy (a mechanistic structure) and instead relies more on decentralization,
initiative - taking, and mutual adjustment by organizational members (an organic
structure). In combination, a more innovative organization should have lower levels
of specialization and formalization, and higher levels of decentralization, than its size
alone would require.
Innovation also increases task interdependence between the functions, which
should be handled by mutual adjustment between functions, fostered by having
cross - functional teams and facilitated by integrators.
Diversification of products (or services) reduces interdependence between oper-
ational units, and a divisional structure should be used, that is, product (service)
divisions for product (service) diversification and geographical divisions for geo-
graphic diversity. The less relationship there is between the product (services) or
geographies, the less synergy there is to extract, and so the more autonomous the
divisions should be, resulting in a smaller, less interventionist corporate head offi ce.
If the products (services) are related, then a company with a strategy of sales growth
should use a divisional structure, while a company with a strategy of cost control
should use a functional structure, whereas a company seeking some of both sales
growth and cost control should use a product (project) – functional matrix. Where the
products (or services) have some inter- relationship within each geographical area,
then the company should use a product (service) – geographical matrix.
By adopting the best fitting structure, the organization can realize its strategy, so
that it attains its goals and achieves higher performance.
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EXERCISES
Uncertainty as a contingency of organizational structure
Task uncertainty:
What is the level of uncertainty in the tasks of your organization or in the last organiz-
ation you worked in? Circle the one below that best describes your organization:
Low Medium High
c22.indd 424 6/17/09 2:56:22 PM
424 L EX DONALDSON
Structure:
How would you rate your organization’s structure on each of the following (for each
please give a score of 1 to 5 for from low to high):
Formalization Low High
Knowledge Diffused Top
Style Egalitarian Hierarchical
Centralization Low High
Total
Scores can vary from 4 highly organic to 20 highly mechanistic.
Is your organization more organic or more mechanistic?
Is your organization in fit between its task uncertainty and the degree to which it is
mechanistic or organic – or is it in misfit? If it is in misfit, what changes to its structure
would make it fi t its task uncertainty?
Strategy as a contingency
Structure:
What structure does your organization have at its top level, that is, the direct reports to
the CEO or MD? Which of the following structure type describes it best? Circle one of:
Functional Divisional Matrix
Degree of diversifi cation:
Which dimension is your organization most diversified on – product, service, customer
or area? On this dimension, what is the degree of diversification that best describes your
organization? Circle one of: Low Medium High
Fit or misfi t:
Is there a fit, or a misfit, between the diversification of your organization and its structure?
If there is a misfi t, what structure would be a better fit ?
c23.indd 425 6/17/09 3:11:22 PM
23
Communicate Successfully
by Seeking Balance
DEBORAH A. CAI AND EDWARD L. FINK
How often we hear the charge, “ What we need around here is good communication ”?
Human communication, or the verbal and non - verbal transmission of meaning, is an
aspect of everyday life that is too often taken for granted; we all do it, but how often is
it done effectively? In fact, there are many misconceptions about communication in the
workplace. Someone who talks louder does not necessarily know more than someone who
speaks softly or who hardly talks. Someone who is more outgoing is not necessarily more
competent than someone more introverted. More talk about a problem is not necessarily
better. And venting does not necessarily help to resolve a confl ict.
Communication is a balancing act between a sender and receiver; between talking
and listening; between what is said, how it is said, and when it is said; between task and
relational activities; between conveying types of trust; between using formal and informal
channels; and between communicating with one ’s peers (if one is a newcomer) and with
organizational veterans. And the balancing act varies for the level at which the communi-
cation is targeted, whether to individuals, groups or teams, departments, or the organiz-
ation as a whole. This chapter examines the challenges of balancing the various needs
that drive communication.
Subprinciple 1: Communication is a balancing act between senders and receivers
To communicate can include many different aspects. It can be associated with providing
information, resulting in a plethora of memos, newsletters, articles, announcements,
reports, and e - mails. It can mean participatory involvement, accomplished through team
meetings, formal and informal discussions, negotiations, and brainstorming sessions. Or it
can mean engaging employees, in the goals and purposes of the organization and in the
relationships that surround them every day in the workplace.
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426 DEBORAH A. CAI AND EDWARD L. FINK
Each approach to communication is driven by different assumptions. Some managers
approach communication as a one - way barrage, sending out messages with regular fre-
quency with the assumption that well - informed employees will be effective in what they
do. Some managers approach communication as a group activity, holding regular meet-
ings with groups of people to brainstorm, discuss, and determine directions to pursue.
And some managers view colleagues and employees as both relational beings and goal
oriented, involving them in a variety of ways in the various levels of deliberation and
decision making that occur within the organization.
Although communication is one of those every day and all day human activities, its
effectiveness can vary greatly. Just because a manager is a good talker, sends a barrage of
memos and e - mails, or holds frequent meetings does not mean the manager is an effective
communicator. When it comes to communicating, more is not necessarily better; it ’s how
it is done that matters. Communication, although used throughout the day every day, is
a skill like running: Most people are able to run, but only the trained athlete can compe-
tently compete.
The classic model of communication proposed by Shannon and Weaver in 1949 high-
lights a unidirectional mode of sending messages from sender to receiver (Shannon and
Weaver, 1963 ). The message is encoded by the sender, sent through a channel, and decod-
ed or interpreted by the receiver. The whole process is influenced by noise, which can be
physical (e.g. aural, visual, gustatory, tactile, olfactory) as well as emotional or psychological.
In other words, noise can include an ambulance siren as well as physical fatigue that can
make paying attention to a message difficult. Lasswell ( 1948 ) summarized the communica-
tion process with the following statement: Who said what to whom through what channel
with what effect?
More recent iterations of the process have advanced Lasswell ’s model of communi-
cation: Communication is not unidirectional from sender to receiver; rather, if a sender
provides a message, the receiver interprets it and responds to it, even if the response is a
grimace or a smile. In addition, communication often involves many parties – groups, mass
audiences, readers, and message designers. While one person is speaking, another may
communicate boredom or frustration or excitement just as clearly using non - verbal cues.
An effective communicator pays attention to the multiple messages that are being delivered
between parties as well as to the effectiveness of those messages in accomplishing the many
goals of the communicators involved (Wilson and Putnam, 1990 ). Communication done
well requires a sense of balance, between the sender and receiver of messages, between
talking and listening, and between too much versus too little communication.
For example, in a recent communication training session for about 25 managers, one
trainer delivered her presentation using a series of PowerPoint slides, which she scrolled
through with little emotion. She held the microphone too low for it to pick up her voice,
read the material verbatim off the slides, and presented the information on the assigned
topic in a cursory manner. This one - way approach to communication – from presenter to
audience – missed the multiple non - verbal messages being sent in the other direction by
the others involved in this interaction: yawns, drooping eyelids, and glazed looks. At the
end of the presentation, when the audience was asked if it had any questions, there were
none, indicating that the presentation was so complete as to accomplish the training goal
in its entirety, that the audience wasn’t alert enough to know what to ask, or that the audience
was just grateful that the presentation was over. Presentations are too often assumed to be
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427 COMMUNICATE SUCCESSFULLY BY SEEKING BALANCE
one - way communication, yet they are much more effective when framed as interactions,
even when the communication is delivered in a lecture format.
Communication, even between a speaker and a large audience, should involve a balance
in the participation of both sender and receiver. Another way of saying this is that each
party to the communication should play both the roles of sender and receiver. From this
perspective, a manager should not be the one - way deliverer of messages to employees but
should be engaged in a two - way or multiple - way exchange of messages with the team
members, employees, or negotiators. A sender- only approach would be to simply send
memos out to employees – one way, disappearing into the void of organizational oblivion;
but a two - way, sender – receiver approach means that the effect of the memo should be
assessed: Did the employees receive it, attend to it, understand it, evaluate it, and give the
message sender the necessary feedback? These processes – receipt, attention, comprehen-
sion, evaluation, and feedback – are all part of communicating, but feedback is essential if
the organization is to benefit from the experience, knowledge, ability, and attitudes of the
organizational members. Furthermore, the implementation of any directives in the memo
as the sender expects, and responses to future memos, require the complete cycle of com-
munication, including feedback.
One of the common mistakes made about communication is that it predominantly
involves talking, leading to the fallacy that the more messages sent out the more com-
munication has occurred. Managers often make the mistake of assuming communication
occurs in only one direction: “ From me to you. ” Thus, messages are treated as if they are
unidirectional, aimed outward, and rarely returning, rather than listening, watching, and
responding to feedback or messages sent in return. What ’s more, an employee ’s opinions,
questions, and, most importantly, criticisms are often viewed as disruptive or even a waste
of time (Senge, 2006 ).
Subprinciple 2: Communication is a balancing act
between speaking and listening
The idea that “ more communication is better ” needs to be reconsidered. More talk may
help, but more talk is not sufficient to improve communication, and at times, more talk
can even be detrimental to problem solving. It is not enough for an athlete to say, “ I need
to run more ” or “ I need to play more tennis ” or “ I need to swim more.” Whatever the
sport, the athlete improves through a planned program that includes targeted improve-
ment across needed skills, good nutrition, and careful attention to prevent injuries. At
times, too much activity, especially when done wrong, can cause more injury than benefi t.
In the same way, too much talk can actually hurt the communication process rather than
help it. More talk is not suffi cient; more effective communication is what is needed.
Communication involves both talking and listening, neither of which is as simple as it
sounds. But here ’s a good place to start: To talk effectively depends on the ability to listen effectively.
And the balance between the two should be that some talking should be balanced with a
lot more listening.
Listening has been significantly associated with perceptions of communication com-
petence in the workplace (Haas and Arnold, 1995 ) and has been shown to contribute
to promotion and advancement within organizations (Sypher, Bostrom, and Seibert,
1989 ; Sypher and Zorn, 1986 ). It is one of the most important abilities for employees
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428 DEBORAH A. CAI AND EDWARD L. FINK
and employers (Wolvin and Coakley, 1992 ). Listening involves both accuracy and support
(Cooper and Husband, 1993 ), seeking input and suggestions, willingness to put one ’s own
thoughts aside, empathy, willingness to respond to others ’ questions and suggestions, and
willingness to ask questions of others and seek their response to those questions. Listening
behaviors include not interrupting as well as acknowledging others ’ comments with
both verbal and non - verbal responses. And most of all, listening takes time, an ability to
remember the content of the conversation, and a willingness to act on what was heard
(Halone and Pecchioni, 2001 ). At times listening may require ensuring that there is suf-
ficient time to listen and consider suggestions and options rather than coming up with an
immediate plan of action.
Generic listening responses include nodding and backchanneling (e.g. giving vocal
responses such as mmhmm, yeah, or go on), whereas specific listening behaviors include lean-
ing forward to punctuate a point the other has made, adjusting one ’s posture to mirror the
other person’s physical position, or providing responses that signal specifi c acknowledgment
of the other person’s points such as found in empathic listening (Pasupathi, Stallworth, and
Murdoch, 1998 ). The empathic listener summarizes the emotions expressed by the speaker.
In addressing how to communicate effectively during crises, Donohue ( 1992 ) has provided
the Four R method for effective listening:
1. Receive the other ’s comments without interruption and don’t get defensive.
2. Repeat the person’s comments as objectively as possible.
3. Request the other ’s proposed ways of dealing with the problem.
4. Review the options and decide on the best approach. (p. 41)
This approach focuses on allowing others to work through their emotions (see Chapter 8 ),
helping them move to considering viable options, and respecting their conclusions before
issuing or pushing one ’s own views of the matter. Effective listening requires the balance
of putting one ’s own views aside long enough to really comprehend what others are say-
ing and then determining the messages that will be most appropriate and effective based
on this information.
Subprinciple 3: Communication is a balancing act among what is
said (content), how it is said (manner), and when it is said (time)
Too often communicators emphasize only the verbal aspects of messages – the words with
which the message is expressed – without attending to supporting cues, such as paralin-
guistic features, the role of pauses, and the value of silence. Communication is much more
than just the content of the message, or what is said.
Manner. An effective communicator adapts not only the message but the delivery to
what is known about the other party. Not only is it important to attend to how messages
are communicated to others through one ’s tone of voice or supportive cues, but hear-
ing through the paralanguage of others is also needed. Paralanguage consists of the vocal
elements and vocalization that modifies verbal communication by expressing emotion
through tone of voice, speech rate, and other audible sounds, such as hisses, uh huh , tongue
c23.indd 429 6/17/09 3:11:24 PM
429 COMMUNICATE SUCCESSFULLY BY SEEKING BALANCE
clicking, and shhh. The paralanguage associated with how a thought is expressed can be as
important as the words that are used to express the thought. If one is inattentive to how
one comes across, a speaker may sound frustrated or angry or apathetic when communi-
cating simply because the speaker is tired, in a hurry, or is having difficulty hearing over
background noises. Communication over the telephone is especially challenging to the use
of paralinguistic cues: Laughter must be communicated aurally – with sound – not just
with a smile, because the person on the other end cannot see a smile over the phone; low
or monotone voices can come across as unfriendly or uninterested when no facial cues are
available to suggest otherwise.
Misunderstandings and conflict often occur between people more because of how
something is said rather than because of what is said. Furthermore, national, ethnic, and
regional differences in paralanguage can result in misinterpretation of someone ’s meaning
simply because of the tone of voice or the pace at which a person speaks. For example,
for Korean men, slower speech rate is considered more competent, whereas for American
men, faster speech is perceived as more competent (Lee and Boster, 1992 ). For Arabs and
Greeks, louder speech indicates strength whereas soft speech indicates frailty; for Filipinos
and Thai, a soft tone of voice is considered more competent and respectful than a loud
tone of voice. Japanese, Austrians, and Americans tend to use louder speech whereas
Swedes, Norwegians, and Dutch use more relaxed speech patterns (Ngai, 2000 ). Native
Japanese and Spanish speakers were found to misjudge emotion communicated in spoken
English, misinterpreting anger and hate as indicating nervousness and depression (Graham,
Hamblin, and Feldstein, 2001 ).
Many examples are available to illustrate the importance of attending to paralinguistic
features of communicating (see Chapter 33 on cultural differences). The Chinese lan-
guage, for example, tends to be spoken with a bit louder tone of voice and a more clipped
articulation than English. To a native English speaker, this louder and clipped vocaliz-
ation can sound angry. In addition, Chinese culture uses fewer polite forms than most
Americans are used to, such as please and thank you. In Chinese, polite forms are reserved
to “ give face ” within relationships that need to be nurtured and preserved (see Brown and
Levinson, 1987 ). As a result, to a native English speaker, a native Chinese speaker can
sound pushy or upset when speaking English. A phrase such as “ Please, have a seat ” may
be expressed as “ Sit here,” which seems impolite to the English speaker, especially when,
as mentioned, it is clipped and louder than the English speaker is used to. Although the
meaning of “ Please, have a seat ” means the same to the English speaker that “ Sit here ”
means to the Chinese speaker, the paralanguage along with the lack of the polite form,
please, results in the Chinese speaker being perceived to be unfriendly and curt by the
English speaker. Especially in a diverse workplace, in which diversity can include gender,
ethnicity, and cultural and even regional differences, effective communication includes
realizing that the delivery of the message may have as much to do with how a message is
understood as the verbal content of the message.
Time. Because discussions of communication generally center on what is said and how
it is said, the effects of silence, pauses, and timing are often overlooked. Silence can have
both negative and positive effects on communication, depending on how it is used and
how attentive people are to its use. Some people are silent because of personality or
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430 DEBORAH A. CAI AND EDWARD L. FINK
because of cultural norms: Japanese and Finns prefer silence because it is an oppor tunity
to learn and a protection of privacy, whereas excessive talking is viewed as indicating
arrogance. Americans, French, and Italians value thinking out loud and expressive
communication to share ideas and gain the confidence of the listener (Lewis, 1999 ). As
a result, brainstorming – the process of quickly emitting ideas, whether good or bad, to
encourage people to be creative in coming up with new ideas – is a process that is not
comfortable for people from cultures in which being wrong creates a loss of face or in
which only leaders are expected to provide direction. A brainstorming session, or similar
group discussions, may leave a person who is reticent, due to culture or personality, out
of the discussion, even when the person has good ideas to contribute. Team members,
and especially team leaders, may find that the reticent individual has much to offer to the
discussion when given the opportunity to express ideas in a different setting. Thus, such
individuals need to be encouraged to give their input during the meeting or they need to
be talked to one on one outside of the meeting if their input, which may be very valuable,
is to be obtained. (Technology can be used to facilitate communication without the threat
posed by face - to - face interaction; see Chapter 32 .)
A more subtle influence of silence is the use of conversational pauses. Ford and
Thompson ( 1996 ) found that a pause of 0.3 seconds was noticeable in conversation, and
pauses of as little as 0.13 seconds have been found to have psychological relevance to lis-
teners (Hieke, Kowal, and O ’ Connell, 1983 ). In a study of conversational patterns, people
who paused before responding, especially when they then responded with um after paus-
ing, were judged to be less honest and less comfortable with the topic of discussion (Fox
Tree, 2002 ). A pause of only half a second is likely to be interpreted as meaning that the
speaker is giving up his or her turn to speak (Wennerstrom and Siegel, 2003 ).
Pauses can be helpful or harmful depending on their use within conversation and the
national, ethnic, or regional meanings attached to them. A person who pauses longer,
waiting for his or her chance to speak, may be left out of the conversation and may even
be perceived as uninterested or as having nothing to contribute, when what is actually
happening is that the pattern of conversation simply leaves that person out. Gender and
regional differences as well as non - native English speech patterns can result in longer or
shorter pauses than those used in standard spoken English. When a question has been
asked, people from some cultures wait longer than half a second to answer, which could
shut them out of the conversation in most American business meetings. Similarly, women
in the US are often socialized to wait for a speaker to stop speaking, signaled by a brief
pause, before taking their turn to speak, whereas men tend to begin speaking at the very
end of someone else ’s sentence, picking up the turn to speak just before the other person
has finished. This pattern can leave women out of an ongoing discussion with men if
the women don’t adjust their speech patterns or if turn - taking is not enforced, as it is,
for example, by parliamentary procedure (Robert, Robert, Evans, Honemann, and Balch,
2000 ).
In contrast, Ngai ( 2000 ) found that Ethiopian and Tanzanian negotiators, once they
began to talk, often continued talking for five to 15 minutes without giving up their turn
to speak; when others tried to break into the conversation the negotiators from these
countries continued to speak over them. But Ngai also found that Ethiopians used long,
dead silences to communicate displeasure or show disagreement.
The use of filled pauses – uh, er, ah , and um, for example – gives a communicator time
to think and refl ects the range of word choices that a speaker has (Schachter, Christenfeld,
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431 COMMUNICATE SUCCESSFULLY BY SEEKING BALANCE
Ravina, and Bilous, 1991 ). Thus, speakers who are searching for what to say resort to fi lled
pauses, which should be noticeable to the audience. Some communication topics give the
speaker fewer word choice options, and therefore the speaker will emit filled pauses at a
low rate (Schachter et al., 1991 ). Schachter et al. ( 1991 ) found that those lecturing on the
natural sciences emitted filled pauses at lower rate than did those lecturing on the social
sciences, who, in turn, emitted filled pauses at a lower rate (but not signifi cantly lower)
than did those lecturing on the humanities. Thus, if a speaker emits fi lled pauses at a rela-
tively high rate, the listener may either attribute that to the speaker ’s lack of expertise
on the topic or to the topic ’ s not being very “ factual. ”
So differences in pauses can leave someone out of the conversation unintentionally and
lead to misattributions about the quality and quantity of one ’s contributions to the group.
To address this issue, a good communicator will not only listen to the person talking but
also watch to see who is not talking and find ways to involve those people who appear to
be less responsive to the conversation (see case example “ Managing the babbler, ” below).
But pauses can also be helpful in communicating. Long pauses can be used strategically
to put pressure on another person to respond to a question or to concede an offer. Because
even a half - second pause means something to listeners, Americans find pauses that exceed
more than a few brief seconds to be uncomfortable. Thus, creating a long pause puts
press ure on the other person to fill the pause. Teachers use this tactic to pressure students
to respond to their questions, but teachers must be taught to wait, to count to 15 seconds,
before restating the question or providing an answer. Similarly, trained negotiators use this
tactic to pressure an opponent to give in. The one who breaks the silence is often the one
who concedes. In a study conducted by the first author, participants from Taiwan and
the US engaged in negotiation, and a repeated pattern was observed: An American par-
ticipant would make an offer; the participant from Taiwan would look down at his or her
profi t sheet to consider the offer; a long pause would ensue, during which time the Taiwan
participant was thinking. Inevitably, the American would make a conceding offer before
the Taiwan participant could respond to the initial offer. The Americans couldn’t wait
through the extended pause, taking the pause as a rejection of the offer. In fact, the pause
could have been an opportunity for both parties to think through their options.
Communication involves a balance between knowing when to speak, when to listen,
when to let others speak, and when to wait. And waiting can sometimes take hours, days, or
even longer. When emotions are intense or the path of decision is unclear, waiting a period
of time, to let emotions cool or to gather more information about interests and options,
can be a worthwhile investment of time. Rather than continuing to meet in an attempt to
force a decision, allowing interested parties to consider information provided in an initial
meeting and to think through options made or new options may result in a more reasoned
decision, one that the parties are more willing to accept and agree to.
Technology affects the pace, structure, and ambiguity of communication. For example,
e - mail and text messaging encourage brief messages, “ point - for- point statements and rebut-
tals ” (Kolb, 1966, as cited in Rice and Gattiker, 2001 , p. 561), and, due to the absence of
paralinguistic and other non - verbal cues, misunderstandings especially with regard to the
emotional tone and intent of the sender. Emoticons, such as
6
and
K
, developed in part
to deal with this problem. Furthermore, these high - tech high - text methods of communicat-
ing generally lack the formal structure of, for example, a formal meeting or business letter,
and the norms for these forms of communication within and between organizations are just
being developed: Does one begin an e - mail as if it is a letter or as if it is a telephone call or
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432 DEBORAH A. CAI AND EDWARD L. FINK
as if it is a face - to - face conversation? Conversations, even business conversation, typically
have a playful element prior to termination; does one engage in non - serious communication
with a business associate via e - mail, and if so, how? In addition, because these communi-
cations are asynchronous, it is often hard to interpret a non - response: Is the other party
angry or busy or consulting others or considering and weighing options or merely engaging
in other activities rather than responding? Strategic non - responses, such as seeming unavail-
able when actually available, are easier to pull off with technology because it is harder to
find out the communicative availability of the other party when one is at a distance. Finally,
initiating these high - tech high - text communications when angry is frequently disastrous:
When the “ send ” key is clicked, there is no recourse.
More communication is not better when emotions are high, not if the communication is
no longer effective at sharing information or if the greater amount of communication may
lead to damaging relationships. Sometimes delaying the communication and then approach-
ing the issues from a different direction, such as by one - on - one discussions, providing sum-
maries of the variety of interests covered in the initial meeting, and allowing emotions to
subside, is a more effective approach. Then returning to communicate about the issues at
another time can generate a fresh look at the problems at hand, one that can be successful
in part because tempers have cooled and new ideas have come to the forefront (see case
example “ The team dissent over hiring, ” below).
Subprinciple 4: Communication is a balancing act between
task and relational activities
For an organization, there are several balancing acts that are notable. Most importantly,
there is a balancing act between the task and relational (socio - emotional) functions to
which the organizational leadership must attend. According to Bernard, “ the survival of
any organization depends on its ability to solve two problems: the achievement of the pur-
poses for which the organization was formed, and the satisfaction of the more immediate
needs of the members of the organization ” (Slater, 1955 , p. 308).
A communication may convey information about the task at hand (related to “ the
purposes for which the organization was formed, ” for example deciding whom to hire),
relationship information (related to “ the satisfaction of the more immediate needs of the
members of the organization, ” for example how solid the friendship is between group
members), or both. And communication is the medium by which these activities are
accomplished. An example of task and relational activity phases over time is found in
phone and hallway conversations: However task - focused a conversation is, it will often end
with a joke or some other unserious remark that brings the conversation to a close.
Early coding schemes differentiated task from relational communications (Bales, 1950 ).
Communications that are positive and socio - emotional are those that show solidarity,
tension release, and agreement; those that are task related are those that give or ask for
suggestions, opinions, or orientations; and those that are negative and socio - emotional
are those that show disagreement, tension, or antagonism. When we communicate over
time, we go through phases when either task or relational communication predominates.
In addition to this over- time specialization, groups tend to have individuals who generally
focus on task matters and others who focus on relational matters.
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433 COMMUNICATE SUCCESSFULLY BY SEEKING BALANCE
The differentiation of task and relational leadership in an organization is sometimes
captured in the formal organizational roles. Managers are, generally speaking, supposed
to focus on organizational success, as, for example, determined by sales, productivity, and
corporate image. Some organizations overlay this management structure with counselors,
ombudspersons, and human relations staff, whose function is to solve problems associated
with inappropriate communication, animosities, and cliques in the workplace. Modern
organizations have HR departments to deal with relational issues, although the “ bottom
line ” may still be the implicit underlying consideration.
In organizational groups or teams, there is likely to be a differentiation between both
the relative amounts that group members communicate and the orientation of their com-
munications between tasks and relationships. As for the first, there is evidence that sheer
talking helps create a leadership hierarchy (Mullen, Salas, and Driskell, 1989 ; Stein and
Heller, 1983 ; but cf. Pavitt, Whitchurch, Siple, and Petersen, 1997 ). Talking more helps
make one a group leader (for better or for worse). On the other hand, there is some evi-
dence that leaders specialize in task activities or in relational activities (Slater, 1955 ; cf.
Lewis, 1972 ). Burke ( 1968 ) stated that “ inequality of participation [by group members]
in task activities leads to the emergence of separate specialized task and social - emotional
roles [when task activity is low in legitimacy] ” (p. 404). Thus, the amount of communi-
cation along with the balance of specialization in task activities versus relational activities
helps to create the group ’s hierarchical structure.
This hierarchical structure has important implications for the way that antagonisms
and disagreements are created and transform the group. A relationship has been found
between the amount that the group ’s task leader exceeds others in task performance and
the amount that the low - status group member is scapegoated, at least in groups whose
activities are low in legitimation (i.e. the acceptability of the tasks to the group members;
see Burke, 1969 ). Further, if the task leader does not support the low - status member, scape-
goating the low - status member increases (Gallagher and Burke, 1974 ). In other words,
group members are likely to be antagonistic and disagree with the low - status group mem-
ber, rather than show solidarity toward or agree with this person, when the task leader is
performing admirably and doesn’t support the low - status group member.
Consistent with these ideas, a simulation found that the most effective five - member
group had members with different roles, including a social organizer and a democratic
task leader (Hare and Hare, 2001 ). Furthermore, in student groups, “ the nature and fre-
quency of the leader ’s communication, ” among other things, affected the quality of what
the group produced (Harper and Askling, 1980 , p. 6). In this study, the leaders of success-
ful groups communicated more about task than about socio - emotional matters and were
perceived as communicating more than others. Finally, scapegoating undermines group
effectiveness, because it lessens the involvement and productivity of the person scapegoated,
takes the time and energy of group members to “ excommunicate ” a group member
rather than integrate the member in the group, and in most bureaucratic organizations it
takes additional time and energy if the scapegoated member is to be dismissed: Typically,
the leader must repeatedly (1) document the failures of this individual, (2) document the
attempts to improve this individual ’s performance, (3) sanction this individual, and (4)
document the acknowledgments by the scapegoated individual of these documents and
meetings related to them. Although these activities may be necessary if a member is not
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434 DEBORAH A. CAI AND EDWARD L. FINK
competent or is particularly disruptive to the group, these activities are usually quite costly
to the group and to the organization.
Thus, several balancing acts are needed:
◆
Leaders may wish to democratize group meetings by encouraging greater com-
munication by all group members, but doing so may undermine the leader ’s role
as a leader. Therefore, the leader must realize that equality of communication by
group members is not realistic and is ultimately inefficient, but promoting task -
related communication generates support for the leader and effi ciency in the group.
◆
Leaders may concentrate on task - related activities, but they also should be aware
that relational concerns require time and effort. Therefore, leaders may designate
another person to give these concerns their necessary attention, and they should not
minimize the importance of maintaining morale and preventing scapegoating.
◆
Joking and other unserious activities may appear to reduce task activity, but at vari-
ous times they may be necessary for the group ’s communicative health. Therefore,
the leader must recognize this need for playful communication, especially as groups
complete their scheduled work time; they should not view these activities merely
as diversions from work; and they may need to provide organizational resources –
release time, space, and funds – for these activities.
◆
If task activities are not viewed as acceptable, or if support for the low - status group
member is not communicated, group members may resort to scapegoating, which is
an unproductive and divisive activity. Therefore, a leader needs to persuade group
members that its tasks are legitimate and needs to avoid undermining any low - status
(but potentially valuable) group members, which, in the long term, builds a more
effective group. These ideas also suggest that reprimands be private whenever poss-
ible; otherwise group members may either scapegoat the individual who has been
reprimanded or, if that individual can form a coalition with other group members,
the coalition can undermine the leader.
Subprinciple 5: Communication is a balancing act between learning
from formal versus informal channels
The process of becoming integrated into an organization also requires a balancing act.
On entering an organization, a new employee is expected to be successful in handling
a new job, which requires acquiring new knowledge and becoming acclimated to new
expectations, decision - making processes, and relationships. Furthermore, these “ novelties ”
take place in an environment that is new to the recruit or novice. Socialization is the pro-
cess through which an employee comes to understand the knowledge, values, norms, and
behaviors needed to participate as a member of the organization (Van Maanen, 1975 ; see
also Jablin, 2001 ). These aspects – organizational knowledge, values, norms, and behav-
iors – must be learned, and they are learned through communication (see Chapter 20 ), via
formal as well as informal channels. Furthermore, the formal and informal channels both
provide information, which is sometimes reinforcing, sometimes independent, and some-
times contradictory. So there is a balancing act between learning about the organiz ation
through formal policy documents, hierarchies, and plans, and adhering to them, versus
utilizing informal interactions and organizational norms to generate one ’s organizational
c23.indd 435 6/17/09 3:11:26 PM
435 COMMUNICATE SUCCESSFULLY BY SEEKING BALANCE
conduct and understanding. Both the formal and informal structures and norms are nec-
essary to learn, and successful newcomers ’ behavior is a synthesis of these normative
systems.
Informal channels are typically replete with stories – narratives that are presumed to tell
the “ real ” version of what’ s what (Mumby, 1987 ) – and gossip. Gossip, even if ultimately
wrong, mean spirited or innocuous, is a means to acquire influence by selectively sharing
information, and information is power. Biological anthropologist Robin Dunbar ( 1996 )
hypothesized that gossip provides the same “ positive strokes ” that grooming does among
other primates. In addition to gossip, much of the novice ’ s organizational learning involves
listening to and interacting with third parties, vicarious learning (i.e. being infl uenced, often
unconsciously, by what happens to others), and surveillance (purposeful observation). One
sees who talks with whom, who is formally rewarded or punished, who is informally dero-
gated or praised, who has broad freedom of action and who does not, who has formal
or informal influence over others, and who knows how and with whom to connect to get
the job done. As Mechanic ( 1962 ) has shown, often lower- status people – an offi ce man-
ager who handles files, or, more humorously, company clerk (and bugler) Corporal Walter
“ Radar ” O ’ Reilly in M
*
A
*
S
*
H (Hornberger and Gelbart, 1972 – 1983 ) – control access to
people, information, and the flow of information (see Katz and Kahn, 1966 ).
People who learn and adopt the organization’s values develop strong interaction skills,
become competent communicators within the organization, are generally more satisfi ed
in their work, identify more closely with those with whom they work, and become more
integrated into the organization’s communication networks. This integration results in
greater accessibility to information and facilitates further integration. But the hard part
of the socialization process is not to put too much stock in the informal network, nor to
put too much stock in the formal one. And it should be noted that there are ethical limits
on organizational commitment: Some organizations may not be worth one ’s commitment
(see Chapter 20 ).
Subprinciple 6: Communication is a balancing act between learning
from newcomers versus veterans
If a person is new to an organization, with whom does that person talk? On the one hand,
the organizational veterans presumably know how the organization works; after all, they
have already been integrated, with varying degrees of success, into the organization. On
the other hand, these veterans may appear (and often are) unapproachable – they might
want to distance themselves from the newcomer because of an “ anti - fraternization ” ethos – and
they might even delight in some small degree of hazing the newcomer. There may be a
veteran who serves as a mentor, but even if this were the case the interaction of mentor
and newcomer may be limited and too “ official, ” that is, too closely tied to formal com-
munication channels and the information that it provides. On the other hand, one ’s peers
may be quite approachable, but they may lack the requisite knowledge that the novice
needs. Furthermore, being seen as too closely tied to other novices may give the appearance
of being too loosely connected to the organization. If the newcomer uses peers for social
support, how is the newcomer to “ learn the ropes ” ? Interacting with veterans to acquire
organizational knowledge may have the inadvertent effect of looking like a brownnoser, and
no one wants to be characterized in this way. Hence, another communication balancing act.
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436 DEBORAH A. CAI AND EDWARD L. FINK
There is evidence about how this balancing act works. Fink and Chen ( 1995 ) studied
a university ’s faculty members. They divided their sample into three groups based on
the number of years that each person had been a faculty on that campus: 17 or more
years ( “ HI tenure ” ), five to 16 years ( “ MI tenure ” ), and less than five years ( “ LO tenure ” ).
Comparing the high - versus the low - tenure groups, the high - tenure group was found to
be significantly more homogeneous with regard to university - related beliefs and attitudes.
Furthermore, members of each tenure group spent significantly more time communicat-
ing with their own group members than with members of the other group. The higher
net amount of communication within the HI tenure group was thought to explain why its
members were more homogeneous than the LO tenure group was.
The effect of this communication pattern to relative veterans versus to relative novices
was clear: An individual ’s attitudes and beliefs become more similar to the group with
whom he or she has greater communication. The balancing act for novices involves having
greater communication with their peers but suffi cient communication with their seniors so
as to accelerate their integration into the organization. Integration into the organization
makes newcomers more effective organizational members, and the more that newcomers
communicate with veterans, the faster their integration into the organization.
Finally, it should be noted that communication with non - peers has a special infor-
mational advantage when one is seeking ties that go beyond one ’ s immediate organiz-
ational “ neighborhood. ” Granovetter ( 1973 , 1995 ) has shown that one ’s peers are likely
to want to be of help, but they are likely to have the same base of information that one
already has. On the other hand, those with whom one is less associated – in Granovetter ’s
terms, those who are weak ties – are likely to have information that one doesn’t have. So,
for purposes of connecting to those outside one ’s immediate communication network,
such as for getting a job, one might turn to those with whom one is weakly attached.
Granovetter ( 1973 , 1983 , 1995 ) has shown that these weak ties are associated with the dif-
fusion of ideas and fashion as well as finding out about job opportunities; his 1983 essay
clarifies the weak - tie hypothesis and its relevance to a broad array of studies. The com-
municative balance discussed here is between the support but ignorance of those who are
close and the inaccessibility but knowledge of those who are communicatively far.
Subprinciple 7: Communication is a balancing act between types of trust
It should be obvious that communication affects the trust people have for each other
(see Chapter 21 ). At the negotiation table trust can make or break a deal; trust between
parties allows the negotiators to focus on the instrumental issues, whereas low trust can
redirect the negotiators ’ attention to psychological and emotional issues. Lulofs ( 1993 )
showed that the level of trust between people affects the level of uncertainty they have
interacting with each other, which in turn affects the goals they are likely to pursue dur-
ing their interaction, which then affects their likelihood of using power strategies: When
parties have low trust, they are more likely to use defensive power strategies that exacer-
bate confl ict rather than constructive problem - solving strategies.
Trust is often described in unidimensional terms; Pruitt and Carnevale ( 1993 ), for
example, defined trust as an expectation that the other person will cooperate in the future.
But trust is a multidimensional concept, so communication with co - workers must entail a
balance between four different types of trust (Cai and Hung, 2005 ), each of which affects
c23.indd 437 6/17/09 3:11:26 PM
437 COMMUNICATE SUCCESSFULLY BY SEEKING BALANCE
different perceptions about the communicator (see Chapter 21 for a more detailed dis-
cussion of trust). The first dimension, competence, has to do with conveying to others that
they can trust in the abilities and capabilities of the communicator. In the case of a man-
ager, the competence of the manager affects the perceptions employees and colleagues
have of the manager ’s ability to deliver promises, accomplish goals, and lead effectively.
Low competence on the part of the manager can quickly lead to distrust on the part of
the employees and result in lack of attention on the part of those receiving the manag-
er ’s messages. Similarly, perceptions that an employee lacks competence can have negative
consequences on gaining increased responsibilities, promotion, and raises. Communicating
competence requires that a person understands what is expected for the roles that one
plays, as an employee, a negotiator, or a manager; further, the individual must understand
how these expectations are shaped by the culture of the specific organization. The indi-
vidual needs to be able to enact those expectations when they communicate.
The second dimension of trust is integrity, which is the expectation that a communicator
will adhere to high ethical and moral standards A manager may be competent in her job
performance, but if she lacks a moral compass, acting without clear principles for deter-
mining fairness and discipline or without attention to organizational policies designed
to protect and uphold rights of employees, distrust will quickly ensue. Communicating
integrity involves articulating the fair and reasonable principles that guide judgments and
actions.
Dependability (or what is also referred to as conscientiousness, see Chapter 2 ) is the
third dimension of trust: knowing that a person can be counted on to do what he says he
will do. When a job needs to be done, the best person for the job is one who is both com-
petent to do the job as well as dependable to get the job done (and, of course, will do so
with integrity).
The last dimension of trust is benevolence: communicating that the other person’s best
interest is kept in mind. This dimension involves letting people know that they are impor-
tant, that their goals and needs have value, that their ideas are heard and considered,
and that the communicator can be trusted to act on their behalf. However, communicat-
ing this aspect of trust requires careful attention to that fine balance of attending to the
job and attending to the people doing the job. A manager cannot act with too much integ-
rity, but communicating too much benevolence can undermine the working relationship
that the manager maintains with the employees, especially if benevolence is not balanced
with competence and dependability. And too much benevolence on the part of employees
may be perceived as weakness or may result in a manager taking advantage of employees who
communicate too much goodwill. By all means, communicate benevolence but do so with
attention to the requirements of the organizational roles one must play.
Communicating trust, in all its dimensions, involves a balance between taking into
account both who you are as the sender of the message and with whom you are com-
municating. One size does not fit all when it comes to communicating trust. Messages
must be tailored with the recipient in mind and adjusted based on the feedback the recipi-
ent communicates in return. Credentials, which communicate competence, only go so far.
The most competent employee who is not dependable may soon be left out of decision
making. And a manager who acts only as a sender of messages is likely to find that his or
her communication is not reaching those meant to receive the message or the message has
but a limited effect.
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438 DEBORAH A. CAI AND EDWARD L. FINK
CASE EXAMPLES
Managing the babbler
Sally works with a group of managers that meet regularly for planning meetings. She has
come to view the meetings as a waste of time because it seems nothing ever gets done.
One person in particular is the source of the problem; in private, Sally refers to this per-
son as a babbler: someone who jumps into the conversation before anyone else has a chance
to speak, dominates the discussion, expresses strong opinions on every issue that arises,
and speaks far too long to say what could have been said in a sentence or two.
Given the economic challenges the company is facing, some important issues are com-
ing up in the next meeting. This meeting is especially important because it will require the
managers to work through some tough decisions over issues such as whether to replace some
of the old initiatives with new ones and whether layoffs will be necessary. Sally feels strongly
that this meeting is not one in which one person should dominate the discussion. A variety
of perspectives need to be heard, and there needs to be an opportunity to debate the issues
and listen to options to come to a joint agreement about where the company is headed.
Sally ’s afraid that this process of discussion won’t happen with the babbler on board.
1. Suppose Sally were the group leader: In that role what could Sally do to address her
concerns?
2. Suppose Sally were a relative newcomer to the organization. In that role what could
Sally do to address her concerns?
3. As a group, what could be done to manage the communication for better decision
making before the meeting? During the meeting? After the meeting?
4. Review the balancing acts that are discussed above. What types of communication
need to be balanced in this situation? How should they be balanced?
The team dissent over hiring
In recent months, Kampen Company has hired several people to fi ll important positions.
Not only has the competition for the jobs been fierce, but conflicts that have arisen over
whom to hire have been fierce within the organization. In one recent situation, the team
in charge of hiring consisted of seven team members plus a team leader. Although the
person to be hired will be a member of the team as a whole, some of the team members
will work more closely with this person than others. Having narrowed the choices down
to three candidates, the team was split in its decision as to whom to hire, and strong emo-
tions drove the discussion. Group A, which consisted of the three team members who
would work the most closely with the new hire, felt strongly that the first candidate was
clearly the most qualified, that the second candidate met the basic job requirements, and
that the third candidate was not at all qualifi ed. Because they would work closest with the
new hire, Group A believed strongly that its preference should carry the most weight in
the hiring decision.
Group B, which consisted of four team members, saw the situation quite differently.
These four people all agreed that the third candidate was the best person for the job and
c23.indd 439 6/17/09 3:11:27 PM
439 COMMUNICATE SUCCESSFULLY BY SEEKING BALANCE
should be hired because this candidate not only met the job requirements but also brought
much needed diversity to the team overall.
During the meeting in which the team was to discuss whom to hire, a long and heated
discussion unfolded. The team leader tried to maintain a civil discussion, but managing
the group ’s emotions and keeping the communication from becoming too heated was a
challenge. Group A felt that it was being treated unfairly and was being dominated by the
rest of the team members, who they believed did not fully understand the requirements of
the position. As a result, Group A felt disrespected and distrustful of Group B ’s motives.
The discussion continued to disintegrate.
In the fi nal analysis, the team leader had the authority to hire whomever the leader con-
sidered to be the best candidate for the job. But the team leader faced several challenges.
One challenge was to be responsive to the interests of all the team members. Another chal-
lenge was to hire the best person for the job. A third challenge was to somehow prevent the
divisive rift that seemed to be emerging on the team. And a fourth challenge was to support
diversity in hiring.
In an effort to be responsive to the interests of the team members and to end the long
and heated discussion, the team leader called for a vote. As was predictable, Group B out-
voted Group A, and the third candidate won the vote. Also predictable was that, although
Group B “ won, ” everyone walked out of the room feeling angry and betrayed by some
members of the team.
So now the team leader had a new dilemma. The team leader agreed with Group A
that the first candidate was a much stronger candidate than the third candidate, who was
the least qualified for the position. The leader must consider whether to rely on majority
rule and hire the person who won the vote or to exert authority and hire according to her
judgment. In addition, the leader must consider the ramifi cations of these choices.
In the end, the team leader did neither. First, the team leader delayed hiring for a week
to give the process the time that was needed for tempers to cool and to give the team
leader a chance to talk with people one on one about their preferences. Second, based on
individual discussions with each team member, the leader wrote up a list of several issues
that seemed to be central to various team members in making the hiring decision, putting
in writing the objective interests and then circulating this list of concerns to the mem-
bers of the team. Third, after time had passed, tempers had cooled, and everyone had
time to consider the scope of interests that influenced the hiring decision, the team leader
called another meeting to discuss once again whom to hire. This time the team mem-
bers assessed the three candidates based on the list of interests that had been provided.
Discussion ensued, resulting in a reconsideration of all the candidates. In the end, rather
than polarizing around two candidates, the reassessment resulted in all of the team mem-
bers realizing that candidate two, who had been largely overlooked because of previous
polarization around candidates one and three, met the interests of everyone on the team.
When a new vote was taken, candidate two received nearly unanimous support. This time
the team leader ’s decision of whom to hire was clear. Candidate two was given the offer
and, after some negotiating, accepted the job.
Several principles arise from this case:
1. Preserving relationships in the long run is better than reaching a decision in the
short run if the short - term decision is at the cost of sacrifi cing relationships.
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440 DEBORAH A. CAI AND EDWARD L. FINK
2. Majority rule is not always the best rule for team decisions.
3. When group communication falls apart, sometimes talking one on one may be more
effective than trying to force discussion and a decision within a group setting that is
over- run by strong emotions.
4. Finding ways to move away from emotionally charged communication to focus on
interests can redirect the discussion to what matters most, but sometimes it takes
effort and creativity to fi nd ways to redirect the communication.
5. Buying time to make a decision can be a very good investment.
Discuss these five principles and relate them to the seven communication subprinciples
discussed in this chapter. Are the five principles new ones, or are they the same as or cor-
ollaries of the seven principles in the chapter?
CONCLUSION
This chapter has focused on several balancing acts that a successful communicator
must manage. Aristotle, and many others, has written about seeking the golden mean by
avoiding both defi ciency and excess. For communication, one must balance
◆ the needs of senders and receivers;
◆ the requirements of speaking and listening;
◆ the content, manner, and time of communicating;
◆ the different phases and roles associated with task and relational activities;
◆ the resources provided by use of formal and informal channels;
◆ the costs and benefi ts of learning from newcomers versus veterans;
◆ the value that different types of trust have for the communicator.
Of course, there are other balancing acts that are not discussed here; for example,
Eisenberg and Goodall ( 2004 ) subtitle their book on organizational communication
“ balancing creativity and constraint. ” But if a communicator within an organization
can balance the seven aspects of communication discussed here, that communicator
will indeed have achieved the golden mean of effective communication.
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EXERCISES
Take - home exercise – sociograms
Communication is both the substance and the medium for information flow. To learn how
information flows, we need to gather data on communication behavior, in particular, who
speaks to whom about what. A sociogram is a diagram in which people are points or circles
and lines represent types of relationships between the people.
1. Keep a journal of everyone whom you spoke to for one day at work. Write down to
whom you spoke (individuals or groups), for how long, about what topics, and the
type of relationship you have with those persons.
2. Group these people together according to the reason you interacted with them; for
example, people you work with on a particular project are grouped together, people
who are in particular departments are grouped together, clients are grouped together,
and so on.
3. Draw a sociogram (or network) that connects these people or groups of people (use
no more than 10 people or groups) to you and to each other. Use thicker lines to
denote strong relationships, thinner lines to denote weaker but important relation-
ships, and dotted lines to denote relationships with people that are both weak and
not important to you.
4. Now redraw the sociogram to illustrate the amount of time you talked with these
people. Use thicker lines to denote more minutes, thinner lines to denote fewer min-
utes, and dotted lines to denote very brief conversations.
5. Compare the two sociograms. What do these illustrations tell you about whom you
communicate with, why, and for how long? Do these sociograms suggest ways you
may improve your communication with others?
In - class exercise – effect of trust on communication
Describe a recent dispute that you had with another person where the trust between you and
the other person was either very high or very low. Describe the relationship between you and
the other party, why there was high or low trust between you, and what happened in the
dispute?
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444 DEBORAH A. CAI AND EDWARD L. FINK
1. Did the level of trust you had with the other person affect the way you communi-
cated with the other person and the outcome of the dispute? In what ways? Which
of the four aspects of trust were involved?
2. If the level of trust had been the opposite of what it was, how do you think your
communication would have been affected? Do you think the outcome would have
been different (in other words, if there was high trust, what do you think would
have happened if trust had been very low, or vice versa)?
3. What do you conclude about the influence of trust on how you communicate? How
can knowledge about trust help you communicate more effectively in the future?
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24
Use Participation to Share
Information and Distribute
Knowledge
JOHN A. WAGNER III
Participation is a process in which decision making, problem solving, action planning, or
similar activities are shared and performed jointly by hierarchical superiors and their sub-
ordinates. To participate, superiors and subordinates work together to identify alternatives,
consider preferences, and fi nalize judgments. Defined in this manner, participation differs
from direction, in which superiors follow autocratic procedures and act alone (Wagner,
1982 ). Participation also differs from consultation, in which superiors ask subordinates for
their inputs and opinions but then weigh alternatives and make a final choice on their own
(Vroom and Yetton, 1973 ). Less obviously, perhaps, participation differs from del egation,
in which superiors remove themselves and cede complete authority to their subordinates.
Whereas participation requires that outcomes reflect needs and interests shared across
hierarchical levels, delegation is more likely to allow subordinates the autonomy to act in
accordance with personal desires (Leana, 1987 ).
Social theorists have long suggested that participation influences human behavior by
(1) involving participants directly in ongoing processes, thereby securing their commitment
to participatory outcomes through the “ sense of ownership ” stimulated by their personal
involvement, or by (2) providing participants the opportunity to exchange and collect infor-
mation, and to become more fully informed and knowledgeable about ongoing activities
and participatory results (e.g. Pateman, 1970 ). Organizational researchers have similarly
speculated that participation might influence behavior in organizations through two dis-
tinct mechanisms, one termed motivational and the other cognitive (Bartlem and Locke, 1981 ;
Locke and Schweiger, 1979 ; Miller and Monge, 1986; Schweiger and Leana, 1986 ; Wagner,
Leana, Locke, and Schweiger, 1997 ). Research on the two mechanisms sheds light on each
mechanism ’s ability to predict and explain likely outcomes of participatory processes, and
thus holds important implications for the management of organizational behavior.
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446 J OHN A. W AGNER III
PARTICIPATION DOES NOT ALWAYS MOTIVATE, AND THE
L
ACK OF IT DOES NOT ALWAYS DEMOTIVATE
The motivational mechanism is thought to affect behavior in organizations through the
heightened sense of personal commitment to or acceptance of participatory outcomes
that comes from having a say in participatory processes and a part in shaping the out-
comes of those processes. According to this explanation, participation stimulates a sense
of commitment that motivates participants to support and implement participatory reso-
lutions. Behavior is motivated and satisfaction is experienced as participants strive to see
their resolutions through to completion.
Research on the motivational mechanism extends back to a series of studies conducted,
during the 1920s and 1930s, at Western Electric ’s Hawthorne Plant, located near
Chicago, Illinois. In reviewing analyses of the effects of factors such as factory lighting,
incentive payment, and supportive supervision on workforce satisfaction and performance,
Hawthorne researchers noticed a pattern of results that seemed to indicate that work-
ers were influenced by social conditions – specifically, by desires to satisfy needs for
companionship and support at work – and that such conditions might have strong motiv-
ational effects. This led them to suggest that participatory involvement, in providing the
opportunity to satisfy social needs, might motivate increased task performance and stimu-
late greater acceptance of organizational policies (Roethlisberger and Dickson, 1939 ).
Following up on this speculation, Coch and French ( 1948 ) performed a study of textile
pieceworkers that appeared to indicate that workers would accept changes in job practices
more readily if involved in the design and implementation of those practices. The authors
identified participatory processes as effective in encouraging acceptance of and commit-
ment to changed standards and procedures. They also characterized participation as a
potentially powerful method of reducing personal frustration and aggression attributable
to resistance to change.
Subsequent analyses of the motivational effects of participation focused increasing
attention on participation defined as a process of influence sharing, and on the heightened personal
commitment thought to accompany the redistribution and equalizing of infl uence and
authority in organizations. Theorists identified participatory processes as likely to have
strong positive effects on workforce morale and satisfaction, feelings of involvement and
commitment, and employee motivation and performance (e.g. Anderson, 1959 ; Dickson,
1981 ; McMahon, 1976 ; Patchen, 1964 ). Research first seemed to support this assertion
(Fox, 1957 ; McCurdy and Eber, 1953 ; Pennington, Haravey, and Bass, 1958 ; Vroom,
1960 ), but as further evidence amassed, it became apparent that participation’s motiv-
ational effects were neither as strong nor as generalizable as originally proposed. Some
studies reported zero or near- zero relationships between participation and motivation,
commitment, or performance (Alutto and Belasco, 1972 ; Castore and Murnighan, 1978 ;
Ivancevich, 1977 ; Jenkins and Lawler, 1981 ; Rosenbaum and Rosenbaum, 1971 ), and
others reported evidence of negative relationships between participation and the same
outcome variables (Gibb, 1951 ; Green and Taber, 1980 ; Latham and Saari, 1979 ).
In the wake of these confl icting findings, Wagner and Gooding ( 1987 ) used a statistical
technique called meta - analysis to aggregate the results of 70 published studies of partici-
pation, in order to estimate the strength of participation’s general effects. After remov-
ing the effects of a troubling research artifact, percept – percept infl ation (Crampton and
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USE PARTICIPATION TO SHARE INFORMATION AND DISTRIBUTE KNOWLEDGE 447
Wagner, 1994 ), Wagner and Gooding discovered that participation correlated, on average,
.11 with performance, .11 with satisfaction, and .10 with acceptance (i.e. commitment).
Although a subsequent reanalysis of Wagner and Gooding ’s data appeared to contradict
their findings (Erez, Bloom, and Wells, 1996 ), an additional analysis showed the contradic-
tory interpretation to be invalid (Wagner and LePine, 1999 ). Other studies have produced
findings similar to and supportive of Wagner and Gooding ’s results (e.g. Locke, Feren,
McCaleb, Shaw, and Denny, 1980 ; Wagner, 1994 ). After considering the available evi-
dence, Locke, Alavi, and Wagner ( 1997 ) concluded that participation’s likely correlations
with performance and satisfaction are both on the order of .11. Changing levels of par-
ticipation (i.e. from direction to participation) therefore explain only about 1% of the con-
current change in performance or satisfaction. This conclusion offers little general support
for the use of participation as a motivational technique in the workplace.
Exceptions: when is participation most likely to motivate?
Despite documenting participation’s limitation, in general, as a motivational tool, Wagner
and Gooding ( 1987 ) also discovered situational conditions under which participation might
have more substantial effects. In particular, their analysis suggested that participation is more
likely to be related to employee satisfaction when participation takes place in smaller groups – typically,
groups of 12 or fewer members. Implied by this finding is the possibility that participants are
unable to develop a sense of personal connection to or ownership of participatory outcomes
in larger group settings, due perhaps to the fact that many people share in the creation of
those outcomes, and thus each participant fails to derive satisfaction from participatory
processes or results. In small groups, however, participation and satisfaction are correlated
at the level of .25 on average, indicating that about 6% of the change in satisfaction can be
attributed to participation’s effects. The size of this relationship suggests that group size is an
important situational condition and that participation in small groups has limited, but none-
theless noteworthy, utility as a practical means of stimulating workplace satisfaction.
Wagner and Gooding ( 1987 ) also reported that differences in task complexity have effects on
the strength of relationships between participation and both satisfaction and acceptance. In each rela-
tionship, the effect is stronger when tasks are less complex, meaning more behaviorally
routine and less cognitively demanding. Suggested is the possibility that participation can
be used to enrich – make more challenging – otherwise oversimplified work. Participation’s
relationship with satisfaction is again somewhat modest, with an average correlation of .26
revealed in the presence of simple tasks, but its relationship with acceptance is more
substantial, as evidenced by an average correlation of .32 under simple task conditions.
Indicated by the latter finding is a fairly strong enrichment effect, in which increasing par-
ticipation by individuals who otherwise perform simple tasks explains just over 10% of the
corresponding increase in acceptance of the results of participatory processes.
PRIMARY CAUSAL MECHANISM: PARTICIPATION
D
ISSEMINATES INFORMATION
In contrast to the motivational mechanism ’s definition of participation as a process of
influence sharing, within the framework of the cognitive mechanism the focus is on par-
ticipation defined as a process of information sharing. From this perspective, participation’s effects
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448 J OHN A. W AGNER III
on organizational behavior are thought to be a function of the increased knowledge and
deeper understanding afforded by participatory information sharing. Researchers have
proposed that participatory information sharing might influence participant behaviors in
several ways, for example: (1) knowing how to do a job increases the opportunity to do the
job productively (Lawler and Hackman, 1969 ; Scheflen, Lawler, and Hackman, 1971 );
(2) understanding how a job fits into the larger picture of workgroup interdependence and
organizational mission enables effective adjustment to changing work conditions (Ledford
and Lawler, 1994 ; Williams, 1982 ); (3) sharing knowledge and insights encourages com-
mon understanding and greater cooperation (Dickson, 1981 ; Marrow and French, 1946 );
and (4) being able to access and make use of the collective information of an organiz-
ation’s membership increases the likelihood of successful organizational innovation and
creativity (Stewart, 1997 ; Tannenbaum, 1968 ).
Research on the cognitive mechanism has sought to determine whether participation
does, in fact, promote information sharing, and whether such sharing can have benefi cial
consequences for the performance of individuals, groups, or organizations. In one study,
Latham, Winters, and Locke ( 1994 ) allowed some subjects in a laboratory experiment
to share and discuss strategies for attaining assigned goals on a class scheduling task, but
prohibited other subjects from participating in similar discussions. Results of the experi-
ment indicated that individuals who participated in strategy discussions formed better task
strategies, felt more able to succeed in the task, and performed better on the task than did
subjects barred from participation. Moreover, differences in strategy quality were found to
explain much of the effect of participation on performance, indicating that participation
improved performance by helping participants discover better performance strategies – a
cognitive rather than motivational effect.
In another study, Scully, Kirkpatrick, and Locke ( 1995 ) manipulated the knowledge
held by supervisors and subordinates in two - person laboratory groups. In one third of
the groups in the study, supervisors had the correct information needed to do their tasks,
in one third they had incorrect information, and in one third they had no information
whatsoever; subordinates were also split in thirds and assigned the same three levels of
information; and half of the groups engaged in participatory information sharing while
the other half did not. Results indicated that participation alone had no effect on subjects ’
performance, but that participation had beneficial effects on performance if the subordi-
nate had correct information and the supervisor had none. In addition, performance
suffered if the supervisor lacked correct information or if either or both members of a
pair had incorrect information.
In a third study, Quigley and colleagues ( 2007 ) distributed knowledge differentially within
dyads of laboratory partners, then examined motivational factors expected to infl uence the
degree of knowledge sharing between partners and the effects of this sharing on partner
performance. Among the results of this study is the finding that group - oriented incentives
motivated sharing more than did individualized incentives, especially when norms between
partners supported knowledge exchange, and that knowledge sharing enhanced partner per-
formance, especially when high self - efficacy and trust in dyad partner led to the development
of diffi cult self - set performance goals. These results suggest that participation might exert an
indirect motivational effect by encouraging knowledge sharing within groups or teams.
An effect of this sort differs from the direct motivational effects assessed in prior participation
research and described above, and appears worthy of further consideration.
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USE PARTICIPATION TO SHARE INFORMATION AND DISTRIBUTE KNOWLEDGE 449
In sum, these studies and others like them indicate that participatory pro cesses can be
used to share or redistribute information, and that such redistribution can have positive
effects on performance when it provides otherwise uninformed individuals with ready
access to requisite knowledge and insights (Bartlem and Locke, 1981 ; Bass, Valenzi,
Farrow, and Solomon, 1975 ; Lowin, 1968 ; Tsai, 2001 ). Also highlighted are motivational
boundary conditions that influence the strength and utility of these effects. Supported is
the principle that participation will be beneficial when some individuals possess or can
discover pertinent information and use participatory processes to disseminate it to others
(Durham, Knight, and Locke, 1997 ).
MODERATORS: WHEN IS PARTICIPATION MOST ABLE TO INFORM?
In addition to confirming participation’s effectiveness in distributing information, Scully,
Kirkpatrick, and Locke ( 1995 ) also provided evidence of an important situational condition –
information impactedness, or the degree to which information is differentially distributed
among people – that appears able to determine whether participation will improve partici-
pant cognition and performance. Participation’s effects appear stronger in instances where
information is impacted, that is, in the possession of some but not all individuals, since par-
ticipatory information exchange allows participants to break down information disparities
and increase the extent to which knowledge is shared and generally accessible. Conversely,
participation’s effects are weaker when information is already available to all, since additional
information sharing is unnecessary and consumes resources more profi tably devoted to
other activities (Latham and Yukl, 1975 ; Bass and Valenzi, 1974 ; Williams, 1982 ).
Beyond the effects of impactedness, speculation and the results of prior research suggest
several additional situational conditions that might also affect the workings of the cognitive
mechanism. One of these, interdependence, concerns the degree to which participants must
work together to perform and succeed. Under conditions of low interdependence, individu-
als, groups, or organizations can perform successfully by working alone, while under condi-
tions of high interdependence, individuals, groups, or organizations must work together to
succeed. Differences in interdependence exert situational influence on participation’s effi cacy
by affecting the amount of information required to coordinate ongoing relationships. While
individuals performing independent tasks need not exchange much information to do their
work, individuals performing interdependent tasks must share a great deal of information,
including messages about what has been done, what must be done next, what adjustments
need to be made in response to changing conditions, and so forth. To the extent that this
information flow must be ongoing, that is, occurring as coordination problems emerge (as
opposed to taking place on an occasional basis or through a supervisory intermediary), par-
ticipatory “ mutual adjustment ” contributes to successful coordination and enhanced per-
formance (Durham et al., 1997 ; Lawler, 1982 ; Sashkin, 1976 ).
Another situational condition, complexity, also appears likely to exert contingency effects
on relationships between participation and performance. Complexity reflects the degree
to which a task, objective, or situation is understandable, with low complexity referring
to conditions that are simple and readily understood, and high complexity alluding to con-
ditions that are complicated or intricate and therefore difficult to interpret and comprehend.
Successful performance in the presence of lower complexity is possible without additional
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450 J OHN A. W AGNER III
information or insight. However, success under conditions of higher complexity requires
access to the additional information needed to render the complex understandable. To
the degree that participatory information exchange is able to provide such access, partici-
pation may produce little benefit when combined with low complexity but should pro-
vide appreciable benefit when paired with high complexity (e.g. Anderson, 1959 ; Singer,
1974 ). Note that this pattern is exactly opposite the configuration of effects revealed in
research on the motivational mechanism, described earlier, wherein participatory enrich-
ment improved performance on simple tasks.
Finally, the situational condition of change concerns the extent to which tasks, group con-
ditions, and organizational contexts are stable, consistent, and predictable, under conditions of low
change, versus dynamic, variable, and unpredictable, in situations of high change. In the
presence of low change, success can be achieved by following familiar procedures, with-
out modifying customary ways of doing things. In contrast, high amounts of change
require that variability first be sensed, and that modifications then be made to existing
plans and processes to match them to the demands of changing conditions. Such sensing
and modification normally require information about the nature of change and the state
of changed conditions. To the extent that such information is available to some but not
necessarily all participants, participation can facilitate information dissemination and lead
to successful adaptation and continued productivity (e.g. Abdel - Halim, 1983 ; Jermier and
Berkes, 1979 ; Koch and Fox, 1978 ; Schuler, 1976 ).
IMPLEMENTATION: STRUCTURING PARTICIPATION CAN
M
AKE IT MORE EFFECTIVE
In thinking about participation, the first picture to come to mind is often that of a group
of participants, seated casually around a table and engaged in spontaneous conversation.
In fact, much research on participatory processes uses a physical arrangement that closely
resembles this configuration. However, studies on group processes have indicated that
grouping people together and asking them to suggest ideas and state opinions in front of
others can stifle input into ongoing discussions. In particular, when personal statements are
readily attributable to individual participants, ideas and opinions that might be con sidered
even the least bit controversial may remain unstated (e.g. Diehl and Stroebe, 1987 ).
To deal with this problem, researchers have suggested structuring group discussion
sessions so that innovation or judgment is done individually and discussion occurs only
to clarify the interpretation of information and brainstorm additional alternatives. Using
the Nominal Group Technique (NGT), for instance, a group of individuals convenes around
a table with a session coordinator and receives a description of the problem to be dealt
with or issue to be addressed. Next, working alone, each participant writes down whatever
ideas come to mind. The coordinator then asks each participant to share his or her ideas
and writes them on a public display. Subsequently, participants discuss each other ’s ideas to
clarify and expand on them, and then evaluate them as a group. Finally, participants rank
the ideas privately, and the idea that ranks the highest among the participants is chosen as the
group ’ s fi nal recommendation (Moore, 1987 ).
As an alternative to using discussion structuring such as the NGT, Locke et al. (1997 )
suggested that emerging information technologies – specifically groupware technologies – might
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USE PARTICIPATION TO SHARE INFORMATION AND DISTRIBUTE KNOWLEDGE 451
be used to improve the effectiveness of participatory information exchange. For example,
an electronic meeting support system can be used in a room of participants to display each
individual ’s comments – typed in on personal computer terminals – anonymously on a
projected screen. This manner of computer- mediated communication reduces the
reluctance that participants might have to present unfavorable information or state contro-
versial opinions. As a result, more information and information of higher quality can be
exchanged among participants, and participants report more satisfaction with participatory
processes and outcomes (Alavi, 1993 ; Alavi and Palmer, 2000 ; see also Chapter 32 , this
volume).
In addition, videoconferencing can be used to bring together participants from several dif-
ferent sites. Although anonymity may be lost, participation is able to nullify some of the
negative effects of physical separation and encourage information sharing across great
distances. Asynchronous approaches can also be used to structure participatory infor-
mation exchange without the requirement of simultaneous presence. For instance, website
bulletin boards and chat rooms can be set up for groups of participants, allowing them to
share information and disseminate knowledge without requiring that everyone be avail-
able at the same time. Corporate e - mail systems can also be used to channel and catalog
information exchanged among participants separated by both time and distance. Using
such procedures, the prototypical face - to - face group is replaced by technological medi-
ation (Locke et al., 1997 ).
CASE EXAMPLES
Volvo
To illustrate some of the costs and benefits of encouraging participation in the workplace,
consider the differing experiences of Volvo and Toyota. Well known as a Swedish pro-
ducer of cars, trucks, and marine engines, Volvo ’s automotive operations were hailed,
during the 1970s and 1980s, as among the foremost examples of progressive industrial
participation (e.g. Jenkins, 1976 ). Assembly employees often worked in groups as direct
participants in personnel decision making (what group members to hire, reward, or fi re),
job design procedures (how to accomplish the group ’s work, how to divide and assign this
work as individualized tasks, when to rotate among task assignments), and similar activ-
ities. Employees also elected worker representatives to serve on management committees
charged with such tasks as insuring workplace health and safety, establishing corporate
environmental policies, overseeing training programs, and assessing proposed product
innovations. In addition, an employee representative sat on Volvo ’s corporate board of
directors. Finally, newer plants at sites including Kalimar and Skovde were designed and
built to support team - based manufacturing and, at the same time, reduce hierarchical dis-
tinctions between managers and workers by placing open management offi ces on the shop
floor, providing central cafeterias to be used by all employees, and creating “ small work-
shop ” areas wherein individual teams could produce complete subassemblies without sub-
stantial outside intervention.
By the middle 1970s, Volvo ’s labor costs had grown to become among the highest in
the automotive industry (Gyllenhammar, 1977 ). Although some of this expense could be
c24.indd 452 6/17/09 3:12:47 PM
452 J OHN A. W AGNER III
attributed to the cost of complying with Sweden’s social welfare regulations then in effect,
as much as a 15% falloff in productivity appeared due to the redirection of workforce
energy away from shop floor production and toward participatory interaction (Swedish
Employers’ Confederation, 1975 ). As long as Volvo was able to command premium prices
for its cars, due to the high perceived quality and durability of its products, the company
was able to offset production costs and compete in the world marketplace. However, with
the introduction of such Japanese lines as Lexus, Infiniti, and Acura, Volvo ’s position as
a quality leader deteriorated and the company ’s ability to offset its high internal costs
declined.
Initially, Volvo attempted to meet market challenges by implementing cost control
measures that included shutting down most major operations at Kalimar, Skovde, and
other newer plants, and cutting back on participatory programming in its older locations.
By 1994, however, rumors within the automotive industry suggested that Volvo was seeking
a friendly merger to stave off bankruptcy or dissolution (Taylor, 1994 ). After consider-
ing several possible partners, in early 1999 Volvo sold its automotive business to the Ford
Motor Company. In 2008, after several failed attempts to cut costs and create profi table
operations, Ford put Volvo up for sale with the hope of recouping enough money to offset
the costs of a decade of ineffi ciency.
Toyota
As Volvo ’s market position declined during the late 1970s and 1980s, the position of
Toyota, another automotive manufacturer, improved dramatically. Toyota typifi es the
approach used in Japanese - based companies of that era to organize shop fl oor operations
and structure managerial affairs. Its production facilities were set up as traditional assem-
bly line operations, and written, standardized instructions regulated most production
processes (Shingo, 1981 ). Centralized, directive, and sometimes secretive management
practices controlled company operations (Sethi, Namiki, and Swanson, 1984 ). In contrast
to Volvo ’s attempts to involve workers in all phases of corporate management, Toyota ’s
higher- level managers reserved the prerogative to lead the company without signifi cant
input from below.
Within this general structure, however, such practices as Quality Circles and ringi
decision making introduced a degree of participation into the shop floor and lower man-
agerial ranks. Quality Circles consist of groups of operative employees that meet with
their immediate supervisors on a regular basis, typically every week or two, for an hour
or two at a time to discuss problems with production scheduling, product quality, shop fl oor
safety, and so forth. Circle participants work together to suggest solutions and improve-
ments, which are then sent up the management hierarchy for further study and possible
adoption (Ferris and Wagner, 1985 ). Ringi decision making is a system in which proposed
decisions are circulated among management subordinates and their hierarchical superiors
for deliberation and approval. Often, proposals are originated by senior managers and
sent through the subordinate ranks for further refinement, although on occasion junior
mana gers initiate the process with proposals of their own that are sent upward for approval
(Cole, 1971 ).
c24.indd 453 6/17/09 3:12:47 PM
USE PARTICIPATION TO SHARE INFORMATION AND DISTRIBUTE KNOWLEDGE 453
In contrast to Volvo ’s experience, Toyota was able to control production costs and, at
the same time, produce cars perceived by consumers to be of high quality and reasonable
price. In an age of oil embargoes and environmental concerns, the company produced
small, fuel efficient cars that came to dominate the North American market. In the 1980s,
Toyota introduced larger cars and later, the Lexus line of luxury automobiles. The com-
pany also expanded its production facilities worldwide and branched into the Scion line
of affordable small cars. All the while, efforts to control costs and improve quality allowed
Toyota to gain increasing market share at home and abroad. During the first quarter of
2008, Toyota ’s sales figures surpassed those of General Motors, up to that time the larg-
est automotive company in the world. Toyota ’s management worried about becoming too
successful and growing complacent in the highly competitive auto industry of the 21st
century.
In comparing Volvo ’s situation with Toyota ’s, there are obvious differences in the scope
of participation implemented in the two companies, since at Volvo participatory pro cesses
were central to corporate governance while at Toyota they played an ancillary role. This
difference alone seems to explain Toyota ’s greater relative efficiency as a producer of
automobiles, since the same kinds of resources that were consumed in participation at
Volvo were expended in production at Toyota. Yet, beneath this conspicuous difference
lies a deeper explanation, originating in differences in the primary reasons why partici-
pation was enacted within the two fi rms to begin with.
At Volvo, participation was seen mainly as a way of restoring the ability of otherwise
routinized manufacturing tasks to satisfy human needs, encourage commitment to the
company and its products, and motivate attendance and successful performance (Aguren,
Bredbacka, Hansson, Ihregren, and Karllson, 1985 ; Nicol, 1975 ). The fact that partici-
pation could encourage information exchange was acknowledged by Volvo ’s management,
but this exchange was thought to be valuable more for the commitment and motivation
that would be aroused for the increased understanding or cognitive gain that might also
occur (Gyllenhammar, 1977 ). Volvo ’s approach was clearly designed to activate partici-
pation ’ s motivational mechanism.
At Toyota, in contrast, participation was used to redistribute information that would
otherwise remain buried on the shop floor or hidden among lower- level managers (Dore,
1973 ). Motivation at Toyota, as in other large firms in Japan, was presumed by management
to come from a combination of deference to authority and cultural collectivism that tied
each employee ’s welfare to the well - being of the employer. Such “ Japanese management ”
practices as lifetime employment and seniority - based pay were used to remind employees of
the permanence of their relationship with their employer and of the importance of working
hard to bring honor to their company and its management (Wagner, 1982 ). The primary
aim of participation was consistent – and at Toyota remains consistent to the present day – with
the cognitive mechanism ’s focus on information sharing and improved understanding.
As suggested by Toyota ’s experiences, participation can serve as an effective method
of managing information and distributing knowledge. Although all of Toyota ’s achieve-
ments in the world marketplace cannot be attributed to the effects of participation alone,
in facilitating the redistribution of information and sharing of knowledge among employees
participation has contributed signifi cantly to the company ’s continuing success.
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454 J OHN A. W AGNER III
CONCLUSION
Individual studies of participation’s motivational effects have sometimes reported
evidence of positive effects, leading researchers and practitioners alike to advo-
cate the use of participation as a source of workplace motivation and employee
satisfaction (e.g. Cotton, 1993 ; Gyllenhammar, 1977 ; Petersen and Hillkirk, 1991 ).
However, more generalizable evidence suggests that participation’s usefulness as a
motivational tool is often quite limited. Only in small groups or in combination with
simple tasks is participation likely to have appreciable effects, and even then only on
the outcomes of satisfaction or acceptance. Managers facing problems with work-
force motivation are better advised to look for solutions in such practices as goal
setting, job redesign, and incentive payment.
Although the collection of studies performed specifically to assess the cognitive
mechanism is considerably smaller than the stream of research conducted on the
motivational mechanism, a stronger case can be made for using participation to
influence performance through its effects on the distribution of information among
subordinates and their hierarchical superiors. Especially when information is unevenly
distributed and the work being performed incorporates signifi cant interdependence,
complexity, or change, participation should yield substantial increases in participant
knowledge and insight which, in turn, should enhance performance and effectiveness
in the workplace. Structuring participatory sessions specifically to encourage the
exchange of information should have additional positive effects. Managers seeking
ways to improve the distribution of information and knowledge are well advised to
consider participatory processes
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EXERCISES
Demonstrating the effectiveness of participation as a method
of sharing information
Materials: Index cards and pen or pencil.
Preparation: Form teams of six members and select one member to serve as leader. For
each team, prepare a deck of eight cards as follows:
Facts [each one on a card with the card number (1, 2, 3, 4, 5, 6, 7, or 8) on the back]:
1. Provider B offers low prices with proven technology but never finishes a job on time
or without bugs.
2. Provider C does very good work with proven technology but is typically quite
expensive.
3. Provider D is going to offer new yet inexpensive technology in its bid. Only two other
companies have used it but have no complaints. The system worked and was on time.
4. Provider E has never been late on a project and its prices are reasonable but almost
always its systems take two weeks to work seamlessly.
5. Company A headquarters is adamant about the project being completed on time
and that it work perfectly within two days.
6. The company (A) has been barely profitable in the last two years and headquarters
is very cost conscious.
7. Blank.
8. Blank.
Procedure: The team of one leader plus five members work for company A. Company
A headquarters wants to install a new telephone system and has delegated the project to
the team. The team is looking at bids from competing companies (B, C, D, and E) for the
telephone system. Each team member and the leader have spent several months doing
research related to the decision (different people have worked on different things). The
project leader makes the fi nal decision. Complete each of the following three trials.
. Trial 1 The leader gets cards 1, 2, and 5. Team members get 3, 4, and 6 – 8. The leader makes
the decision without talking to the members. The decision is recorded without further
discussion.
. Trial 2 Distribute the cards as in Trial 1. The leader can talk to one member about what
is on the member ’s card. A blank card allows another choice. The leader then makes the
decision. The decision is recorded without further discussion.
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USE PARTICIPATION TO SHARE INFORMATION AND DISTRIBUTE KNOWLEDGE 459
Trial 3 (Suggested time for this part: about 10 minutes). Cards 1 to 6 are randomly distributed,
one per person (cards 7 and 8 are not used in this trial). There is full discussion, allowing
all members (including the leader) to report the contents of their cards and fully argue
their views. Then the leader makes the fi nal decision. The decision is recorded.
Questions for discussion:
1. Which trial yielded the best decision? Why?
2. What happens when leaders do not seek information from followers, as in Trial 1?
Knowing this, why do you think that leaders do not often seek information from
their followers?
3. Why do subordinates sometimes choose not to speak up even when they have rel-
evant information?
4. In light of what you have learned in this exercise, what can be done in organizations
to ensure the distribution of knowledge and information?
[Teaching note: The best choice is Provider D. B is too unreliable. C is too expensive.
E is almost never on time. By design, Trial 3 is supposed to yield the correct decision
without fail.]
Choosing the most appropriate process
Form groups of 4 – 6 members and talk about the following in small - group discussions, then
report the results of these discussions back to the entire class in a large - group discussion:
1. Thinking about where you work, describe an instance in which top - down pro cesses
were used to make a major decision. How quickly was the decision made? Was
it the right decision? How well was the decision accepted by those individuals it
affected?
2. Next, describe an instance in which participatory processes were used to make a
major decision. How quickly was the decision made? Was it the right decision? How
well was the decision accepted by those individuals it affected?
3. Finally, describe an instance where delegation was used to make a major decision.
How quickly was the decision made? Was it the right decision? How well was the
decision accepted by those individuals it affected?
4. Based on your answers to Questions 1 – 3, when are each of the three decision -
making processes – top - down, participatory, delegation – likely to be most effective?
When will each be least effective? What do your answers have to say about the
strengths and limitations of participation as a decision - making process?
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25
Broaden the Decision Frame
to Make Effective Decisions
RICHARD P. LARRICK
No decision process can guarantee a perfect outcome. Humans are not omniscient. There
is some uncertainty in both what we know and in what can be controlled. For example,
as a company contemplates a set of project investments, organizational decision makers
are making a number of judgments about both the nature of the projects – the quality of
the personnel involved, the size of an untapped market, the reliability of a new product
design – and the nature of the future – changes in demand or changes in the economy
over time.
In light of this uncertainty, what characterizes an effective decision? This chapter
will argue that a major barrier to good decisions is overly narrow views of a decision, or
narrow frames, which pretend that knowledge is complete. The principle for effectively deal-
ing with narrow representations is to follow a process that broadens the decision frame.
A broad decision frame takes into account (1) multiple objectives – not just the most sali-
ent one at the moment; (2) multiple alternatives – not just the fi rst option that lands on the
table; and (3) multiple outcomes that could arise in the near and long term – not just
the expected state of the world.
Both the psychological and organizational literatures have identified many tendencies that
produce narrow decision representations (Bazerman and Moore, 2009; Miller, 2008). Over
the decades, these processes have gone by a variety of technical names that include “ func-
tional fixedness, ” “ satisficing, ” “ selective perception, ” “ concreteness, ” “ anchoring, ” “ availabil-
ity, ” “ confirmation bias, ” “ predecisional distortion, ” “ framing, ” “ accessibility, ” and “ focalism. ”
Recent theoretical work on decision making has placed these tendencies in a more general
framework (Kahneman, 2003 ; Stanovich, 1999 ; see also Arkes, 1991 ; Kahneman and Lovallo,
1993 ), arguing that the mind is wired with many “ System 1 ” processes that are intuitive, fast,
and automatic, with more deliberate and conscious processes ( “ System 2 ” ) attempting to
monitor and correct these intuitive processes. I will not review all of these intuitive, automatic
tendencies but will instead focus on their consequences for decision representations – overly
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462 RICHARD P. LARRICK
narrow views of objectives, alternatives, and future states of the world. I will then consider a
set of tools for broadening the decision frame, including formal tools of decision making, but
also many informal practices that range from organizational rules of thumb ( “ the Five Whys ” )
to tapping the “ Wisdom of Crowds. ” I will consider limitations and exceptions to broadening
the decision frame before closing with a few illustrative cases of narrow and broad frames.
THE CAUSES AND PITFALLS OF NARROW DECISION FRAMES
In 1772, Benjamin Franklin gave the following advice to Joseph Priestley on how to make
a diffi cult decision he was facing:
In the affair of so much importance to you, wherein you ask my advice, I cannot, for want of
sufficient premises, advise you what to determine, but if you please I will tell you how. When
these difficult cases occur, they are diffi cult, chiefly because while we have them under consid-
eration, all the reasons pro and con are not present to mind at the same time; but sometimes
one set present themselves, and at other times another, the first being out of sight. Hence the
various purposes or inclinations that alternatively prevail, and the uncertainty that perplexes
us. To get over this, my way is to divide half a sheet of paper into two columns; writing over
the one Pro, and over the other Con. Then, during three or four days consideration, I put
down under the different heads short hints of the different motives, that at different times
occur to me, for or against the measure. When I have thus got them all together in one view,
I endeavor to estimate their respective weights; and where I find two, one on each side, that
seem equal, I strike out the two . . . And, though the weights or reasons cannot be taken with
the precision of algebraic quantities . . . I have found great advantage from this kind
of equation, in what may be called moral or prudential algebra. (Isaacson, 2003 , p. 236)
There are two interesting insights in this passage. First, it sketches a formal if simple
decision process that has been frequently celebrated as an early model of more sophisti-
cated decision techniques (Dawes and Corrigan, 1974 ; Hammond, Keeney, and Raiffa,
1997 ). It lays out a rough version of what would now be called “ cost – benefit analysis. ”
The 20th century has witnessed the birth and maturation of many heirs to Franklin’s
simple technique across a range of fields, including economics, statistics, and business disci-
plines such as operations research. Over the past few decades, each era ’s most popular
organizational “ best practice ” (Total Quality Management, Six Sigma) has tried to spread
formal decision frameworks to a broad organizational base. In this chapter, I will give
some examples of formal decision techniques to illustrate the principle of “ broadening the
decision frame ” without attempting to be exhaustive (or exhausting).
A second, more subtle insight in Franklin’s passage is his explanation for why he con-
ducts his “ prudential algebra ” over “ three or four days. ” In his words, decisions are dif-
ficult because “ all the reasons pro and con are not present to mind at the same time; but
sometimes one set present themselves, and at other times another, the first being out of
sight. Hence the various purposes or inclinations that alternatively prevail, and the uncer-
tainty that perplexes us. ” A key psychological insight in this passage is at the heart of why
decisions makers need broad decision frames: the initial representation of a decision is
often incomplete. In Franklin’s view, all the relevant motives and reasons are not imme-
diately salient, but come into view over time. Recent cognitive psychology on memory
(Anderson and Spellman, 1995 ) and inference (Sanbonmatsu, Posavac, Kardes, and
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463 BROADEN THE DECISION FRAME TO MAKE EFFECTIVE DECISIONS
Mantel, 1998 ) suggest the source of the problem: decision makers get “ stuck ” in one way
of thinking about a situation and cannot easily generate and entertain new thoughts. Yet,
even as their thinking gets stuck, decision makers are confident that their understanding
is complete and their resulting judgments are accurate (Soll and Klayman, 2004 ). Three
illustrations of “ narrow frames ” follow. This section closes with a description of how the
social environment will often reinforce narrow individual frames.
Narrow view of the future
When people are asked to make predictions about future events, they typically have
an overly narrow view of what could happen. For example, imagine a company that is
weighing a series of investments that each hinge on future inflation. The company relies
on internal experts to provide a forecast. One form of narrowness occurs when decision
makers accept a point estimate – a single “ best guess ” number – and act on that number.
Point estimates fail to capture the range of outcomes that could result. But a second
manifestation of narrowness can occur even when forecasters try to give a range of plaus-
ible outcomes. The resulting picture of the future is too narrow. Decades of laboratory
research on overconfidence (see Buehler, Griffin, and Ross, 2002 and Soll and Klayman,
2004 for reviews) has shown that people overestimate the predictability of the future, and
these results have held up well in field settings. For example, recent research has shown
that when corporate financial experts are asked to give a range of values that has an 80%
chance of capturing some future economic variable, the experts give a range that captures
the true outcome less than 40% of the time (Ben - David, Harvey, and Graham, 2007 ).
The “ truth ” is a regular surprise.
Although people make a good faith attempt to use evidence to form an accurate expec-
tation about the future, they focus too much on evidence that is consistent with a single
scenario (often an extension of the status quo), and fail to imagine the wider range of poss-
ible scenarios that could happen. This is potentially costly to the extent that a wider, more
accurate range would dictate pursuing a different, better course of action. For example,
an unexpectedly high or low inflation rate might change the valuation of different project
investments. Moreover, anticipating the full range of possible future outcomes can lead
decision makers to develop a contingency plan that can best meet the opportunities and
challenges of different circumstances.
Narrow set of objectives
People often pursue a narrow list of objectives in their decisions. For example, in hiring
new employees, managers will typically focus on the goals of finding someone with technical
ability, appropriate training, and at the right salary, as they should. But a variety of other
objectives might also matter to the hiring decision, such as a new hire ’s leadership potential,
ability to work in teams, or ability to shift to new tasks later. Similarly, in evaluating new
product lines, senior- level managers will no doubt focus on profitability; however, they might
also wish to consider less obvious objectives, such as diversification of product lines, develop-
ment of new organizational capabilities, and development opportunities for personnel.
Where does the process of weighing objectives go wrong? One problem is that individu-
als evaluate choice options without considering their objectives at all (effectively “ shooting
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464 RICHARD P. LARRICK
from the hip ” ). Even when decision makers generate specifi c objectives, however, the list is
typically incomplete. Often the most salient or easily measured objectives block consider-
ation of other objectives.
In a recent article, Bond, Carlson, and Keeney ( 2008 ) provided a compelling empirical
demonstration that people generate a narrow set of objectives. In one study, Bond et al.
had MBA students generate objectives for a highly self - relevant decision: the things they
cared about in choosing an internship. They found that students listed about seven objec-
tives on average and felt satisfied that they had covered everything important. However,
when they were then presented with both their own objectives along with a list of objec-
tives generated by others, the students tended to fi nd another seven objectives that were as
important as the ones they had generated on their own. Left to their own devices, students
had spontaneously generated about half of the objectives that they themselves acknowl-
edged to be most relevant for one of the most important decisions of their life.
In business decisions, this narrow search for objectives is compounded by other
organizational and social factors (Cronin and Weingart, 2007 ). Differences in training,
experience, and function lead individuals to focus on only a subset of the objectives that
are relevant to a decision from an organizational perspective (e.g. product costs, develop-
ment time, materials, features, service support, etc.). Organizational mechanisms, such as
cross - functional teams or job rotations, are designed precisely to ensure that decisions are
made with a broader set of objectives.
Narrow set of alternatives
As a final example, people often consider an overly narrow set of choice alternatives. The
alternatives might be narrow in number (e.g. considering only one job candidate) or nar-
row in scope (e.g. considering only job candidates with an accounting degree). One reason
for a narrow consideration of choice options is due to organizational dynamics: a new
hire or a new project may be suggested at a meeting without any prior consideration of
objectives or options, and is then considered in isolation.
A more subtle form of narrowness, however, arises from individual cognitive processes.
Research on creativity has shown that once one approach to solving a problem is gener-
ated, it is hard to generate new approaches (Chrysikou and Weisberg, 2005 ). Similarly,
research in marketing has shown that thinking of one brand for a consumer good can
actually block thinking of other brands (Alba and Chattopadhyay, 1986). By extension,
organizational decisions that involve generating a range of options (e.g. job candidates,
solutions to a manufacturing problem, etc.) are likely to suffer from the same “ functional
fixedness ” once initial alternatives are generated. However, just as with objectives, decision
makers do not recognize their limited ability to generate alternatives. Research has found
that decision makers report being satisfied that they have generated a broad and complete
set of choice alternatives even when they fail to generate many relevant options (Gettys,
Pliske, Manning, and Casey, 1987 ).
The compounding influence of the social environment
In all of the foregoing examples, the basic cause of narrow framing in individuals is cogni-
tive: associative memory processes lead people to start with a set of assumptions and then
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465 BROADEN THE DECISION FRAME TO MAKE EFFECTIVE DECISIONS
recruit evidence in a way that is consistent with the initial view. There is no compensating
psychological tendency to spontaneously search broadly for a differing mix of objectives,
alternatives, and scenarios. In part, failure to search further is a product of minimizing
effort; but the more subtle obstacle is that the information that comes to mind seems com-
plete and coherent, reducing the feeling of uncertainty that would prompt further search.
These individual cognitive tendencies are only part of the story. These individual fac-
tors then tend to be reinforced through social and organizational processes. Common
training, common experiences, and frequent interaction all have the effect of leading to
shared views on problems (Cronin and Weingart, 2007 ). Although shared views can be
beneficial because they facilitate communication and coordination of efforts, they can
be harmful when they perpetuate narrow perspectives on a decision problem. For example,
marketers who are trained at the same school and work at the same firm on the same
product at the same time will undoubtedly develop expertise, but it is an expertise that
will be largely overlapping. Through training, experience, and discussion, they will tend to
think about problems in the same way – which product features are best, which markets
are most promising, which form of media to emphasize, which analysis to follow, etc. To
the degree that the group members possess a particular insight, that insight will be shared.
However, to the degree that the group members possess blindspots in their thinking, they
too will be shared. Ironically, a like - minded group is a poor source for new objectives,
alternatives, and future scenarios, but more confident in its ability – the consistency of
perspective across colleagues leads each individual to feel validated and confi dent in his or
her view of decisions.
Network sociologists have made similar arguments about how social structure limits
diversity of perspective. They argue that dense network structures – in which clusters of
people frequently interact – lead to overlapping individual perspectives on problems (Burt,
1992 ). Empirical research has shown that decision makers who depend on dense networks
alone perform more poorly than those who are connected to non - redundant knowledge
from outside that dense network (see Chapter 16 ).
Other organizational and social processes reinforce narrow frames because they dis-
courage independence and dissent. A group that starts a brainstorming session without
first asking each member to generate his or her own views on a problem risks having a
specific view emerge early in the discussion that then frames everyone ’s view of the prob-
lem. Finally, even when there are divergent, independent perspectives, they may not be
expressed if the group environment focuses on harmony – or conformity to a boss ’s opinion –
over debate (see Chapters 17 and 18 ). In sum, although narrow representations may occur
at the individual level for basic cognitive reasons, they are often compounded by the social
environment. People surrounded by like - minded peers, who follow poor group processes,
or who are located in dense networks will tend to share the same narrow frame.
TECHNIQUES FOR BROADENING THE DECISION FRAME
Formal techniques
This section reviews three representative formal techniques for broadening the frame.
Although not exhaustive, the three techniques have been chosen for their applicability to
many common decisions.
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466 RICHARD P. LARRICK
Considering multiple attributes and alternatives. Choosing among alternatives is typically
diffi cult because there is no alternative that is superior on all dimensions. Instead, one
has to forego an alternative that may be superior on a less important dimension to gain
superiority on more important dimensions. Multiattribute choice techniques prescribe that
you think through a wide range of objectives you care about and the attributes that would
predict achieving those objectives.
To make this problem concrete, imagine a prototypical organizational hiring process.
A set of candidates has applied and your unit has information on each candidate (degree,
past work experience, letters of recommendation, and so on). You also have a set of objectives
in mind in the hiring process: you need to hire someone who has strong accounting
training but who can also manage a team and can, with time, move into a leadership role.
The information you have on each candidate defines the attribute levels for a given can-
didate (accounting degree versus marketing degree; five years of managing others versus
three years of managing others). These attribute levels help you evaluate how well each
candidate can meet an objective. If a person’s attribute level for accounting experience
consists entirely of “ prior experience with spreadsheets, ” that person does not fare well on
an important attribute.
With this information in hand, you can evaluate each candidate on the level they dem-
onstrate for each attribute. With luck, someone has strong levels on all attributes. More
likely, however, one alternative will be strong on some but not all attributes. The decision
maker must then make tradeoffs and decide whether accounting skills are more or less
important than team skills. This last step is essentially a “ weighting ” step – how impor-
tant are the differences between candidates on each attribute to achieving your objectives?
It should be noted that attributes need not be quantitative or objective – if there is an
important subjective dimension, such as collegiality, this can be assessed and weighed in
the decision.
This very general form of a choice process, anticipated by Franklin’s quote, is the raw
structure for a host of decision - making techniques. The basic structure is to break a prob-
lem down into alternatives and attributes and think about the importance of the attributes.
The actual application of the method can take a variety of forms. When there is a large
set of data that allows one to connect the attributes of past alternatives to subsequent suc-
cess and failure, one can statistically regress outcomes on attributes to see which attributes
are important in predicting success. The attribute weights in this case are derived statisti-
cally and can be applied in subsequent decisions – with a few caveats. The method does
assume that the predictive value of attributes is reasonably stable and that one is predict-
ing to other cases “ inside the range ” of what has been observed in the past. Various crises
in the 1990s and 2000s, such as the failure at Long Term Capital Management and the
subprime mortgage credit crisis, have illustrated problems of predicting “ outside the range ”
of what was observed in the past (often compounded by other problems created by
misaligned incentives and insuffi cient monitoring).
When there are no past data, there are decision analytic techniques for putting weights
on attributes (see Clemen and Reilly, 2004 ; Hammond, Keeney, and Raiffa, 1997 , for a
user- friendly starting point). Some of these processes are “ top down ” – one consciously
weighs the importance of tradeoffs across attributes – and some are “ bottom up ” – one
simply ranks a set of alternatives that differ across attributes and captures the implicit
weights one is giving to each attribute (this technique is known as “ conjoint analysis ” in
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467 BROADEN THE DECISION FRAME TO MAKE EFFECTIVE DECISIONS
marketing). It can be quite useful to use both steps to see whether the head ( “ top down ” )
and gut ( “ bottom up ” ) agree. If they do not agree, it can help identify a missing objective
or force one to reconsider weights on attributes.
Once a multiattribute analysis is done, it can help inform subsequent decisions. And,
in some cases, it can serve as a formula for future decisions that could replace individual
discretion. When would this be desirable? First, a good deal of research in psychology has
shown that when decision makers make a series of choices intuitively – without an explicit
formula – decision makers make less consistent and accurate choices. By looking at alter-
natives case by case, decision makers inconsistently apply weights across cases (Arkes,
2003 ) and over - react to fleeting bits of information about specifi c alternatives (echo ing
Franklin’s insight about the vagaries of “ what comes to mind ” ). Second, basic issues of
fairness can actually support the use of formulas over individual choice. For example,
when mortgage decisions are left to individual loan officers, various prejudices can infl u-
ence their judgments; even if they have no prejudices, officers can still create procedur-
ally unfair outcomes if they weight the same attributes differently for different potential
customers. These inconsistencies may be even more damaging in promotion and raise
decisions inside an organization, since the shadow of the future is longer between employee
and company, and friends share private information. A formula can be an organizational
tool for ensuring neutrality and consistency in decisions (Arkes, 2003 ).
The multiattribute choice process broadens the decision frame by making explicit the
need to consider multiple objectives, multiple attributes that help you achieve the objec-
tives, and multiple alternatives. It directly avoids the trap of paying attention to only one
objective or alternative. By making tradeoffs salient, it prevents decision makers from
being surprised later when unattractive aspects of an alternative become apparent ( “ this
person is good with numbers but lousy with people – what do we do now? ” ). By paying
attention to all attributes, good and bad, early in the decision process, steps can be taken
to mitigate weaknesses. It may be easier to give someone relevant management experience
on the job than to teach them accounting (or vice versa), and a plan can be made accordingly.
Finally, by calling attention to the good and bad early on, it can lead decision makers to
be more creative – to acknowledge that there is no superior alternative at this point, and
to explore in new ways (or with more investment) for an alternative that is strong on all
relevant attributes. A clear understanding of multiple objectives creates a necessity that
becomes the mother of invention.
Assessing and weighing future states of the world. A second formal technique for broadening the
frame is thinking through the range and likelihood of different uncontrollable events that could
influence the outcome of a decision. A course of action that is attractive under one state of
the world (e.g. demand for our product stays strong) could be disastrous under another state
of the world (e.g. demand declines). The first step in assessing risk is to generate the range of
possible scenarios that could arise in the future that influence achieving your objectives. With
such an understanding, one can then assess both the likelihood of each scenario and how it
would affect the outcomes attached to each alternative under consideration. Finally, one can
generate new, contingent ways of responding to each scenario (Schoemaker, 2004 ).
To continue the hiring decision example, a company may be facing an increase in
demand for a product at the moment, but needs to anticipate the need for work over vari-
ous periods of time (a quarter, a year, etc.). Decisions about hiring for a current increase in
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468 RICHARD P. LARRICK
demand depend on how controllable decisions (e.g. opening a new market) and uncontrol-
lable factors (e.g. changes in demand) affect long - term needs. Uncontrollable factors, such
as a change in demand, require that the company assess the range of plausible changes in
demand and attach probabilities to each change. This picture of the uncertain future can
then be used to calculate the “ expected value ” of various hiring options for dealing with a
current increase in demand, such as paying overtime to current employees, hiring temps,
or hiring new permanent employees. Flexibility in reducing staff is valuable if there is a
significant risk of a decline in demand over the long term; adding well - trained, permanent
employees is more valuable if there is a strong likelihood of continued demand.
Risk assessment broadens the decision frame by forcing the decision maker to imagine a
range of scenarios, think through their likelihoods, and assess their impact on the value of
different choice alternatives. It overcomes a basic habit of planning for one future state of
the world. Often the envisioned future is a rosy one (Buehler et al., 2002 ), which is especially
likely for people who are pushing a specific plan or course of action, but it can also be a
gloomy one that leads decision makers to be unprepared for unexpected opportunities. Having
assessed scenarios, likelihoods, and outcomes, one can then formally calculate “ expected
values ” that weight outcomes by their likelihoods. One can also assess whether an alternative
could lead to a wide range of good and bad outcomes and decide whether one would prefer a
safer alternative that has a smaller range of highs and lows (technically, an alternative that has
lower variance). Most importantly from a decision - making perspective, anticipating future
scenarios allows one to make contingent plans – to create alternatives that have known
decision points at which a planned new course of action would be pursued.
Using “ all four cells ” to make accurate predictions. The final formal tool is the simplest: do the right
checks to see whether an attribute predicts an outcome. Consider one more example related
to predicting job performance. Many years ago, Management Focus Magazine reported a
research study claiming that pet ownership as a child predicted future success as a leader.
How did the researchers reach this conclusion? They surveyed 74 Fortune 500 CEOs and
found that 94% had owned a dog, cat, or both as a child. In interviews, the CEOs
observed that “ pet ownership had helped them to develop many of the positive charac-
ter traits that make good managers today, including responsibility, empathy, respect for
other living beings, generosity, and good communication skills. ” (One is tempted to ask
whether “ communication skills ” include beg, sit, and heel . . . . ) Should pet ownership be
an attribute in hiring decisions?
A little reflection reveals two shortcomings with this study. First, the study is looking
at only two cells in a four cell table. Specifically, it is examining the presence or absence
of pet ownership among CEOs. The remaining two cells of interest are the presence or
absence of pet ownership among non- CEOs. If most people have a dog or cat at some
point in their childhood, then we have not learned much from the 94% fi gure among
CEOs. This is a classic problem of sampling on the dependent variable, and there are
many famous examples. For example, the research underlying In Search of Excellenc e in
the 1980s looked at a sample of successful firms to uncover their common practices, such
as “ management by walking around. ” One danger with this “ two cell ” method is that it
invites imbuing ordinary activities with special qualities. Until all four cells are examined,
one cannot even tell if there is a relationship between the attribute and the outcome. (For
example, managers may also be walking around unsuccessful companies, but there it is
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469 BROADEN THE DECISION FRAME TO MAKE EFFECTIVE DECISIONS
called “ micromanaging. ” ) In the extreme, we can observe that all CEOs brush their teeth
and all successful companies have buildings, but we have not learned anything about pre-
dicting success. (See also Denrell, 2003 , for how managers draw poor conclusions from
“ survivors ” in risky environments.)
The second shortcoming of the pet study is that, even if CEOs show a higher rate
of childhood pet ownership, this may not be the causal factor in their success (despite
enhanced communication skills, etc.). Families that have other characteristics that lead to
success in business – money, educational opportunities, job opportunities, and social net-
works – may be more likely to own pets. This is a classic problem of interpreting corre-
lation as causation.
The business press and our day - to - day decisions often rely on casual observation that
“ sees ” a relationship based on only two cells. GE seems to produce a large number of
managers who go on to run other companies. Should other companies copy their system
for training and promoting leaders? It is also the case that GE produces a staggeringly
large number of non - CEOs as well. The key question in evaluating their ability to train
and promote is whether they produce at a higher rate given their employee base. In
using attributes in a decision, one must broaden the decision frame by checking all four
cells in a covariation table to see if there is a relationship, and then, if there is, asking
what additional factors might be serving as causes of the relationship.
Barriers to adopting quantitative techniques. Highly quantitative versions of the techniques
described above are, in theory, already present in many organizations. These tech-
niques have been taught in business and engineering schools for years. They have also
been part of the major management movements of the past two decades. For example,
both Total Quality Management (TQM) and Six Sigma have major components that focus
on risk assessment, causal analysis, and processes for weighing attributes and alternatives.
However, the everyday organizational reaction to using formal, quantitative techniques is
quite mixed (Zbaracki, 1998 ). Employees are cynical when such techniques are proposed in
new programs because they are often introduced by outsiders or from above. The mathemat-
ical nature of the techniques appeals to some employees, but requires extensive training for
many employees. Once learned, the techniques are time consuming to use. And, fi nally, these
formal techniques face a classic problem described in the diffusion of innovation literature:
the benefi ts of adoption are not easily demonstrated. Thus there is a tendency for the formal,
quantitative aspects of these practices to wither in the process of adoption (Zbaracki, 1998 ).
The major benefits of the practices described above do not depend on rigorous quan-
tification but on attempting to follow the general process. The more important factor in
broadening the frame is to strive for a complete representation of the decision problem.
Breadth is accomplished by thinking about attributes, alternatives, tradeoffs, and scen-
arios. Because extensive quantification in decision making can be offputting to many
organizational decision makers, I next consider informal techniques that also preserve the
benefi ts of broadening the frame with even less formality.
Informal techniques
Heath, Larrick, and Klayman ( 1998 ) have proposed that many of the most effective decision
techniques that are actually used in organizations are less formal than the abstract,
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470 RICHARD P. LARRICK
quantitative techniques described in economics and statistics. Instead, these informal decision
techniques, which they called “ cognitive repairs,” fix narrow frames by being simple, specifi c,
home - grown, and social. This section briefly describes several of these informal practices.
Informal techniques for broadening the search for information. Some simple techniques force decision
makers to search for more information without directing decision makers to specifi c
information. For example, one basic technique that has proven to help a variety of
decision shortcomings is to “ consider an alternative ” to the current conclusion (Hirt and
Markman, 1995 ). The technique simply requires a person to ask “ why might my favorite
answer be wrong? ” This question can be applied to a range of decision problems. If a
future scenario seems likely, one can ask why it might not happen. If a single best alterna-
tive has been proposed, one can ask how other options might be better. If pets seem to
predict being a CEO, one can ask whether they also predict not being a CEO. This is
one of the few informal techniques that has proven to have broad utility (summarized in
Larrick, 2004; see also Herzog and Hertwig, 2009; Kray and Galinsky, 2003 ).
A second simple technique for broadening search is the “ Five Whys ” which has been a
regular component of TQM and Six Sigma. The process is simply one of starting with
a problem, asking why, and then following up each answer with an additional why. The goal
is to go beyond a superficial, narrow understanding of a situation to a deeper understanding.
For example, the Five Whys can be used to identify a decision maker ’s basic objectives.
In a hiring decision, one can ask: Why do we need someone with an accounting degree?
Because the person needs to have a good understanding of the financials. Why does the
person need a good understanding of the financials? Because he or she will have primary
responsibility for cutting costs. Why is the emphasis on cutting costs? There has been no
revenue growth in recent years. And so on. The result of asking Five Whys will be more
fundamental objectives that could be pursued through a wider variety of attributes than
initially considered. It can reveal that an accounting degree is not the only way to address
the fundamental objectives, allowing one to consider alternatives that are strong on other
attributes to be considered. Of course, like any informal technique, the Five Whys is
coarse and can go wrong: one can easily ask why owning pets would make one a better
CEO and talk oneself into an elaborate (false) theory of communication skills.
Informal techniques for using a broader set of attributes and alternatives in decisions. A second
class of informal techniques overcomes narrow frames by requiring decision makers to
use checklists for gathering information and evaluating alternatives. For example, one bank ’ s
commercial loan department required that officers evaluate potential customers on the “ 5
Cs ” – Collateral, Capacity, Capital, Conditions, and Character (Heath et al., 1998 ). Although
necessarily imprecise, specifying these attributes helps officers avoid over- reacting to one fav-
orable or unfavorable piece information as they assess a given loan candidate. Similarly,
recent research in medicine has shown that what should be habitual decisions for doctors
can also be helped by checklists. For example, a simple five - point hygiene checklist helped
reduce infection rates at Johns Hopkins hospital from 11% to 0% (Gawande, 2007 ).
Similar protocols have proved useful in diagnosis by encouraging doctors to systematically
consider a wider range of symptoms and disease scenarios (Heath et al., 1998 ). Checklists,
of course, are not perfect. They are likely to provoke resistance from users at fi rst, since
they seem controlling. They will be more acceptable if they are home - grown or inherited
from experts. Moreover, checklists are only as good as the validity of the items on the
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471 BROADEN THE DECISION FRAME TO MAKE EFFECTIVE DECISIONS
checklist and run the risk of omitting important considerations. The bet one makes with
a checklist is that individuals with narrow frames would omit even more of the important
considerations.
Informal techniques for broadening diversity of perspective. A final set of informal techniques
takes advantage of the fact that combining multiple narrow frames can create a broad,
complete understanding of a decision. Specifically, if the independent perspectives of
multiple people are pooled together, the resulting knowledge is broader and more com-
plete than the view of any one person. However, the benefi t of drawing on multiple people
is highly contingent on tapping a set of people who hold diverse perspectives initially and
then following procedures that preserve it.
Consider a technique used in TQM, known as a Kokai watch (Walton, 1990), that
involved assembling a team to evaluate a current procedure and look for improvements.
The team was deliberately assembled with “ non - experts ” – people who were managers
or employees in another department and not expert in the domain they were studying.
The logic of using non - experts is that those wrapped up in a routine cannot step back to
question the process; people with fresh eyes, however, can reason by analogy to a broader
set of knowledge and experience. In general, decisions that involve diagnosing problems
and generating new alternatives can benefit by having non - experts provide fresh eyes. In
a similar vein, Motorola would compose cross - functional teams for new product designs
to ensure diversity of perspective (on objectives, attributes, alternatives, future scenarios,
etc.), but would then break up the team at the end of an assignment (Heath et al., 1998 ).
One could argue that once a team meshes – and especially if it is successful – it should
be preserved for the next assignment. Motorola, however, recognized that even cross -
functional teams can come to share a common perspective on decisions that could limit
the objectives and alternatives in subsequent assignments. By mixing teams, there was a
constant tension created by different perspectives coming into contact.
The value of using groups (see Chapters 15 – 18 ) to broaden frames has received
increasing recognition in recent years, and was popularized as the “ wisdom of crowds ”
in a book with that title (Surowiecki, 2004 ). The main factors that make a crowd wise
are diversity and independence. Unfortunately, classic brainstorming can undermine
independence of thought to the extent that early suggestions can entrain everyone ’s sub-
sequent ideas. Thus, the best group techniques preserve initial differences in perspective
by having individuals think about a problem alone (this stage is often called a “ nominal ”
group), but then pool the information so that others can react to it. Empirical research
shows that nominal groups will generate a much broader set of objectives and alternatives
than any individual can (Bond et al., 2008; Gettys et al., 1987 ). If desired, one can use the
frequency of naming specific objectives and alternatives as a “ vote ” for their importance,
with the caveat that truly creative ideas will tend to be rare ones.
Nominal groups are also superior to individuals in estimating unknown, uncertain
outcomes. Each person’s glimpse of the unknown is imperfect. However, when a large
number of such imperfect estimates are averaged together, extreme errors cancel out,
and the resulting group average will be closer to the truth than the answer of the average
individual (this holds whenever the extremes in the group bracket the truth), which is a
common pattern (Larrick, Mannes, and Soll, 2009). By way of illustration, the Wall Street
Journal publishes twice - yearly economic forecasts from 50 professional economists. These
data are useful for seeing the range of outcomes they think are possible (providing a sense
c25.indd 472 6/17/09 6:33:40 PM
472 RICHARD P. LARRICK
of possible future scenarios); moreover, the mean estimate tends to be more accurate than
the majority of judges in the panel. Although the WSJ routinely celebrates which economist
“ wins ” in a given six month period after the fact, there is no reliable way to pick a single
expert a priori that can beat the group average over time (Larrick et al., 2008). Averaging
judgments is also helpful in quantifying subjective attributes in a multiattribute choice
process: one can ask multiple interviewers to rate different job candidates on collegiality
and use their average judgment for each candidate in a decision.
Although brainstorming is the prototype for group techniques, many hybrid group
processes are possible with the advent of new forms of electronic communication
(Chapter 32 ). Organizations are finding increasing ways to tap the wisdom of their own
employees, customers, and partners in events like innovation jams and prediction markets.
These can be efficient (even fun) ways for organizations to aggregate hundreds of narrow
individual frames to broaden the decision frames of individual decision makers higher in
the organization.
Groups, of course, can talk themselves into poor decisions that they then hold with
high confidence because of the perceived widespread support of the conclusion. To pre-
vent conformity pressures and groupthink, it is essential that groups encourage diversity
of perspective, independence of thinking, and a willingness to express dissent (Chapters
15 to 18 ).
LIMITATIONS TO BROADENING THE FRAME
This chapter has argued for taking a broad view of objectives, attributes, alternatives, and
scenarios in making decisions. This picture of effective decision making is consistent with
a large body of theoretical and empirical work. However, there are potential limitations
to using the principle. This section considers two possible challenges to the principle of
broadening the frame. The first challenge is practical considerations about implementation.
The second challenge is recent proposals to rely on quick, automatic, intuitive processes; in
short, to “ blink ” rather than think.
Practical limits on broad frames. There are several practical limitations to broadening the frame:
◆ Elaborate techniques, such as multiattribute choice processes, are time consuming,
and risk “ analysis paralysis. ” (How do you know when you have reviewed enough
attributes and alternatives?) As decisions become more complex, decision makers
often rely on simplifying processes to make the task manageable (Payne, Bettman,
and Johnson, 1993 ). Recent research has found that too much choice can lead
decision makers to avoid making a choice at all. The diminishing marginal benefi t
of considering more attributes and alternatives needs to be balanced against the
potential cost of overwhelming people with information. Traditionally, decision
makers suffered from too little information. It may be the case that technology is
able to capture so much information that selecting alternatives and attributes – rather
than seeking them – is the greater challenge.
◆ Recommendations that involve soliciting objectives and alternatives from many differ-
ent parties risk introducing conflict, politics, and negotiation. However, even in
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473 BROADEN THE DECISION FRAME TO MAKE EFFECTIVE DECISIONS
a politically charged environment, an awareness of objectives and alternatives
can lead to better decisions through negotiation – specifically, good decisions can
be made if each party sacrifices unimportant attributes to gain more desirable
attributes. And participation at least has one silver lining. Broad participation in
generating objectives, alternatives, and scenarios will tend to increase commitment
to a final decision, especially if the process of collecting and weighing information
is seen as procedurally fair.
◆
More comprehensive processes may increase confidence and satisfaction with a
decision, but, if the processes make obvious stark tradeoffs, they may dampen satis-
faction with a fi nal decision.
Blinking rather than thinking. In his book Blink , the New Yorker writer Malcolm Gladwell
( 2005 ) popularized the notion that sometimes very quick decisions are highly accurate.
This idea has also received serious academic attention in recent years, perhaps as a bit of
a backlash to the rational, deliberate models that had been studied in earlier work. Three
major academic claims in the spirit of Blink seem to challenge the “ broaden the frame ”
principle.
The fi rst claim is that many decisions can be made better and more quickly by focusing
on a single attribute or predictor and then incorporating additional information only if
that first piece is inconclusive (a strategy termed “ Take the Best, ” or TTB, Gigerenzer
and Goldstein, 1999 ). If TTB were generally effective, it would directly undermine the
prescription to use a broad frame. Many studies have shown that TTB is effective –
specifically, it works well in situations when one attribute is much more important than
other attributes, and it works well when the most important attribute is obvious. The
problem with these demonstrations, however, is that they are selective. One of the main
difficulties in decision making is the uncertainty around identifying the most important
attributes and in knowing how much weight to place on them. Empirical research shows
that people have a hard time learning which attributes are most important (or predictive).
If there is error in identifying the most important attribute, TTB performs much less well
than broad strategies that use multiple attributes (Hogarth and Karelaia, 2007 ; Payne
et al., 1993 ). The case for TTB also has other weaknesses, such as testing it only with
attributes that have two levels. In short, using multiple attributes or multiple predictors is a
better strategy when information is known with uncertainty.
A second claim that challenges the principle of broaden the frame is that many expert
decisions are done quickly and automatically, without extensive weighing of options.
Expert decision making has been studied in a number of domains, ranging from tasks
such as chess to fi refighting. Research by Klein and colleagues (Lipshitz, Klein, Orsaanu,
and Salas, 2001 ) makes a convincing case that experts do process information differently
than novices. Specifi cally, experts have a wide array of experience in their particular task that
allows them to quickly recognize a situation and retrieve an effective course of action.
The main question for organizational decision making is what conditions support the
development of these skills? First, it should be noted that the skills of experts are domain
specific – chess masters and fi refighters do not develop general decision - making skills
that apply to new domains, but only to their own. Second, experts are able to develop
skills because they face a very favorable environment for learning – an environment in
which a person can experience a broad but recurring set of situations and see the immediate,
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474 RICHARD P. LARRICK
unambiguous results of his or her actions (Hogarth, 2001 ). If situations were constantly
novel, or feedback were ambiguous or delayed, it would be very difficult to learn how to
react effectively – and “ experts ” in many judgment domains make predictions that are no
better than those of novices (Camerer and Johnson, 1991; Tetlock, 2005 ).
Moreover, it is not quite accurate to say that experts use narrow frames; it is more accu-
rate to describe them as quickly taking in relevant attributes and automatically generating
alternatives. These automatic responses are based on broad experience that is quite costly
to gain. Research indicates that expertise takes about 10 years of hard, conscious practice to
develop (Ericsson, Krampe, and Tesch-Römer 1993 ). Finally, despite the ability to rapidly
recognize situations, it is interesting to note that chess experts make a fast initial assessment
but then broaden the frame by weighing different alternative actions and anticipating a
range of possible scenarios that might follow (Makridakis, Hogarth, and Gaba, 2009).
A third claim that challenges the principle of broaden the frame is the proposal that
“ unconscious ” decision making is superior to “ conscious ” decision making (Dijksterhuis,
Bos, Nordgren, and van Baaren, 2006 ). In these studies, people were presented with four
apartments that differed on 12 attributes, creating 48 pieces of information. Participants
saw each piece of information once, in random order; the information was then taken
away and decision makers were either told to think about the decision for four minutes or
asked to complete a filler task for four minutes. All participants then reported a decision.
The fi ller- task group was more likely than the deliberation group to select the apartment
that was superior on more attributes. This paradigm, however, has not stood up well to
additional empirical tests. First, deliberating for four minutes on a fairly simple decision is
an unusual task; when decision makers are allowed to “ self - pace ” their decision (which
is often relatively quick), they perform as well as the “ unconscious ” decision makers. Second,
when the task is changed so that the magnitude of the differences between alternatives
on some attributes is quite large, conscious decision making correctly favors the better
option – in this case, an option that has fewer positive attributes but that has a higher
expected value (Payne, Samper, Bettman, and Luce, 2008). The Dijksterhuis paradigm
also has practical weaknesses. First, it is not a pure instantiation of unconscious decision
making – it involved a great deal of conscious consideration of both alternatives and
attributes prior to the unconscious decision process. Second, the paradigm does not pass
a day - to - day plausibility test – if attribute and alternative information is both available to a
decision maker and unfamiliar, why would the person not be able to examine the informa-
tion as he or she made a decision?
A more compelling argument against deliberation was made in research by Wilson and
colleagues (Wilson, Lisle, Schooler, Hodges, Kaaren, and LaFleur, 1993 ). In this study,
student participants listed reasons as they chose a poster for their dorm or apartment; a
control group chose a poster without any deliberation. Three weeks later, the group that
listed reasons was less happy with their poster than the “ gut reaction ” group. The authors
argue that articulating pros and cons for the poster decision is a poor strategy because
the important attributes are hard to articulate (the beauty and style of a poster), leading
decision makers to focus on less important but easier to articulate attributes (the color,
size, or subject). This is a fair critique of broadening the frame – if broadening the frame
brings in irrelevant attributes that distract decision makers from relevant attributes, it will
hurt decisions. As I mentioned in the section on multiattribute choice, however, subjective
dimensions are fair game for inclusion in the choice process. It would be reasonable when
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475 BROADEN THE DECISION FRAME TO MAKE EFFECTIVE DECISIONS
choosing a poster to capture a gut reaction in addition to reasons pro and con and weigh
them against each other if they are in conflict. Recent research has started to examine the
benefits of combining intuitive and analytic judgments (much like averaging judgments in
a crowd) because each type of judgment can compensate for weaknesses in the other.
In popularizing the idea of “ blinking, ” Gladwell himself does not take a clear stand on
when it makes sense to blink and when it makes sense to think. He describes how many
intuitive processes, such as stereotyping, are inaccurate and harmful. It is also interesting to
note that many of his examples of successful blinking support the principle of broadening
the frame. For example, Gladwell reviews John Gottman’s startling research on couples.
Gottman is able to watch short videotaped segments of couples interacting early in their
relationship and predict whether they will stay together over subsequent years. Moreover,
he has identified a handful of specific cues, or attributes, that predict whether couples will
stay together (when they have a disagreement, for example, do they show a lack of respect
for each other?). As amazing as these results are, however, they are not compelling illustra-
tions of blinking over thinking. First, untrained observers cannot watch the brief clips and
make accurate predictions – in this case, fast, automatic, intuitive processing fails. Second,
trained observers can make accurate predictions, but they only know what to look for
because cues and outcomes were carefully measured for decades in Gottman’s lab. Large
regression models were then performed on the data to identify which cues or attributes
were most predictive. Regression is the quintessential multiattribute choice technique.
CASE EXAMPLES
In this section, we consider two cases that illustrate varying degrees of narrow and broad
frames. The first case, the Challenger space shuttle analysis, is an infamous example of a
narrow frame for checking information. The second case, Seagate, illustrates how indi-
viduals often hold narrow objectives, but an organizational process of gathering objectives
can broaden the fi nal decision frame.
The Challenger launch decision
After years of glory striving for and reaching the moon, the National Aeronautic and
Space Administration (NASA) found itself in the early 1980s slipping from the national
limelight. To slip from the limelight meant not only to lose glory, but also to lose stature
when requesting funding in each year ’s federal budget. NASA had made space travel more
economical with the creation of the reusable space shuttle in the late 1970s and had fl own
over 20 successful missions by 1986. However, orbital flights did not attract the attention
of lunar missions and sporadic delays had diluted the interest of NASA’s remaining
audience. In the early 1980s, NASA decided to send a civilian into space – a teacher named
Krista McAuliffe – to help recapture the imagination of teachers and school children.
Even while NASA was having success with the space shuttle it was discovering problems
with the shuttle design. Engineers from the firm that designed the shuttle ’s fuel boosters,
Morton - Thiokol, had gathered data on various physical problems observed after
shuttle flights. In particular, they noted that large rubber gaskets known as O - rings fre-
quently showed wear and signs of “ blow- by” (escaped exhaust). These O - rings played a
c25.indd 476 6/17/09 6:33:41 PM
476 RICHARD P. LARRICK
critical role in containing the burning fuel in the shuttle boosters. By the early 1980s, the
engineers had suspicions that temperature was related to O - ring problems. (It was later
recognized that cold temperatures made the rubber of the O - rings brittle, thereby pre-
venting them from sealing.) As they approached the February 1986 Challenger launch,
engineers were concerned that the below - freezing launch temperature was far below that
of any previous launch. The engineers raised their concerns with NASA administrators,
but they gathered and presented data in a piecemeal fashion which blocked the ability to
see any overall picture.
As importantly, all of the data the engineers presented were focused on past problem
flights, seven in number, which had occurred at a wide range of temperatures and provided
a murky picture. To quantify it, four problem flights had occurred when temperatures
were below 65 degrees; three had occurred when temperatures were above 65 degrees.
NASA administrators decided that staying on schedule was more important than acting
cautiously based on such ambiguous evidence. However, as Tufte ( 1997 ) notes in his
retrospective analysis, the evidence was not ambiguous – it was incomplete. (And, to be
fair, the engineers also did not have access to all the temperature data.) Tufte notes that
“ the flights without damage provide the statistical leverage necessary to understand the
effects of temperature . . . and no single chart contained data on both in relation to each
other ” (pp. 44 – 45). In other words, to see all four cells in the Challenger example, one needs
to know how many past fl ights were fl own without damage at warm and cold temperatures.
The answer: 17 flights had been flown at temperatures above 65 degrees with no problems;
no fl ights were flown at temperatures below 65 degrees without a problem. Using all
24 historical cases, the conditional probability of a problem was 15% above 65 degrees
and 100% below 65 degrees. (These results hold for alternative cuts of the data: problems
arose on 41% of fl ights flown at temperatures below 75 degrees (7/17 cases) compared to
0% for fl ights above 75 degrees (0/7 cases).)
The Challenger incident has become the most famous example of a failure to broaden the
frame when assessing a relationship. It shows why it is not enough to look at the relation-
ship between a variable of interest, temperature, and one outcome, failure. One must also
look at the relationship between temperature and success. The combined data – all four
cells – supported the suspicion of a link between temperature and O - ring failure and
made a convincing case for caution when the temperature was below freezing.
Defining objectives at Seagate
In the early 1990s, Seagate Technology was the largest manufacturer of disk drives in
the world. It had recently acquired a dozen companies and was working to create a single,
integrated company from the disparate parts. Ralph Keeney was approached to help
the company identify a comprehensive set of objectives that would help Seagate defi ne
its mission (Bond et al., 2008 ). Keeney started by meeting with each high - level executive
separately. In each discussion, he asked the executive to identify “ any objectives, hopes,
desires, aspirations, or plans (s)he had for the new organization ” (p. 65). This open - ended
questioning was followed by more tailored questioning that helped respondents consider
objectives that he or she touched on only lightly. Keeney then summarized the objectives
and sent the summary to each respondent to see if they accurately represented his or her
views. Obviously, the future of the firm was an important issue to each of the executives.
c25.indd 477 6/17/09 6:33:41 PM
477 BROADEN THE DECISION FRAME TO MAKE EFFECTIVE DECISIONS
Executives committed a substantial amount of time to the task and had a chance to refl ect
on their answers.
By pooling the objectives together, Keeney identified eight overarching objectives ( “ con-
tribute customer value, ” “ help employees achieve satisfaction, ” and so on) with 39 specifi c
objectives tied to meeting the larger objectives ( “ increase customer productivity, ” “ provide
opportunities for career growth, ” and so on). On average, each individual executive men-
tioned five of the eight overarching objectives, and 14 of the 39 specific objectives. When
the entire set of objectives was organized and presented to senior management, there was
a consensus that the aggregate list was what Seagate wanted to achieve. Only one indi-
vidual had close to half the overall picture.
The Seagate example illustrates how individuals tend to have an incomplete represen-
tation of firm objectives. As importantly, it shows one example of a process for broadening
the frame – anoint a specific individual to gather information (in this case, a neutral out-
sider trained in eliciting information). However other processes could substitute for hiring
a consultant. A trusted inside member could play the same role. Or electronic mechanisms
(see Chapter 32 ), such as a jam or bulletin board, could be used to gather insights over a
period of time. All of these mechanisms will lead to a more complete representation of
objectives that should guide both company and, at times, department - level decisions.
CONCLUSION
This chapter has focused on narrow frames as a general problem in decision making.
It has not focused on enumerating the many specific biases that have been identi-
fied through research, such as honoring sunk costs, forming probability judgments
based on what is available in memory, and treating gains and losses differently
(interested readers should see Bazerman and Moore, 2009 , for a useful review of
these specific biases). These specific biases are important and worth knowing about.
Most of them, such as “ availability, ” are examples of how fast, automatic cognitive
processes yield an incomplete cognitive representation. The premise of this chapter
is that the fundamental problem in decision making is accepting such incomplete
representations as complete.
The prescription to decision makers therefore is to use processes that broaden
the frame for important decisions. By incorporating more complete information,
broad frames will, on average, be more accurate than narrow frames. In the spirit of the
chapter ’s principle, however, I must acknowledge that future research may identify pre-
dictable contingencies when narrow frames – rapid, intuitive, simple representations –
are more accurate than broad frames. The bet based on current evidence is on broad
frames. Future research will broaden the frame of our understanding.
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480 RICHARD P. LARRICK
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EXERCISES
Generating alternative causes
Have a group of participants think about the following scenario: “ The Delta Corporation
is in trouble. One of its best products, the portable z - phone, is not selling well even while
related products from Apple and other companies are selling very well. ”
Divide the participants into groups of about five. First, have each person work alone to
list all the reasons why the product might not be selling. Then have each group combine
ideas from all members (discarding those they think are preposterous). Count how many
more ideas the group as a whole had as compared to each individual member, including
the best member. If there is time, see if the groups combined did better than any one
group. Further, there could be a discussion of what actions to take on each of the ideas
presented.
Generating objectives
This exercise is modeled after research conducted by Bond et al. ( 2008 ). In this exercise,
participants are asked to generate objectives for an important decision. If this is conducted
in a group, try to identify a decision of common interest and importance. For example,
ask participants “ What objectives are relevant to you when buying a house? ” (Depending
on the audience, other topics might include business unit objectives, choosing a major, or
choosing a job.)
Have participants independently generate a list of objectives. Then break them into
teams to compare lists of objectives. If you wish to conduct a formal exercise, you can
have a note - taker list all of the objectives for each team, which will involve grouping and
eliminating redundant objectives. Have participants assess the completeness of their own
list of objectives – were there important objectives generated by other group members
that they overlooked? Expand the conversation by having participants discuss how a list of
objectives could be used as a decision tool in an organization.
c26.indd Sec2:481 6/17/09 3:18:47 PM
26
Stimulate Creativity
by Fueling Passion
TERESA M. AMABILE AND COLIN M. FISHER
People will be most creative when they feel motivated primarily by the interest, enjoy-
ment, satisfaction, and challenge of the work itself – and not by external pressures. This
is the “ Intrinsic Motivation Principle of Creativity ” (Amabile, 1996 ), and it suggests that
the social environment, particularly the presence or absence of external pressures in
that environment, can influence creativity by infl uencing people ’s passion for their work.
Managers can influence the level of creativity in their organizations by establishing
work environments that support passion for the work.
Intrinsic motivation is the motivation to do work because it is interesting, engaging,
or positively challenging. In its highest form, it is called passion and can lead to complete
absorption in the work (Csikszentmihalyi, 1990 ). The elements that make up intrinsic
motivation include a sense of self - determination in doing the work (rather than a sense of
being a pawn of someone else), a feeling that one ’s skills are being both fully utilized and further
developed, and positive feelings about the work, which may be akin to positive affect or positive
emotion (e.g. deCharms, 1968 ; Deci, Koestner, and Ryan, 1999 ; Deci and Ryan, 1985 ;
Lepper and Greene, 1978 ).
A considerable body of research over the past 35 years (conducted with both children
and adults) has demonstrated that external pressures in the work environment, also called
extrinsic motivators, can decrease intrinsic motivation and, as a result, can decrease cre-
ativity. Most of this research has been experimental, demonstrating that reduced intrin-
sic motivation and reduced creativity can be caused by each of several different extrinsic
factors, including: expected external evaluation (Amabile, 1979; Amabile, Goldfarb,
and Brackfield, 1990; Hennessey, 1989 ), surveillance (Amabile et al., 1990 ), contracted -
for reward (Amabile, Hennessey, and Grossman, 1986 ; Hennessey, 1989 ; Kruglanski,
Friedman, and Zeevi, 1971 ); competition with peers (Amabile, 1982 , 1987 ); and con-
strained choice in how to do one ’s work (Amabile and Gitomer, 1984 ; Koestner, Ryan,
Bernieri, and Holt, 1984 ). Each of these factors causes lower levels of intrinsic motivation
c26.indd Sec2:482 6/17/09 3:18:47 PM
482 T ERESA M. A MABILE AND C OLIN M. F ISHER
and creativity. In fact, one experiment demonstrated that simply thinking about extrinsic
motivators led to temporarily lower levels of creativity in adults (Amabile, 1985 ).
Non - experimental research in organizational settings has largely supported these fi nd-
ings. This research suggests that there is indeed a link between intrinsic motivation and
creativity (e.g. Amabile, Hill, Hennessey, and Tighe, 1994 ; Dewett, 2007 ; Shin and Zhou,
2003 ) and that extrinsic constraints in the work environment operate as killers of intrin-
sic motivation and creativity at work. This research also suggests, however, that certain
other work environment factors operate as stimulants and supports of intrinsic motiva-
tion and creativity (e.g. Amabile, Conti, Coon, Lazenby, and Herron, 1996 ; Amabile
and Gryskiewicz, 1987 ; Andrews and Farris, 1967 ; Pelz and Andrews, 1976 ; Stahl and
Koser, 1978 ). Interestingly, although constraints on how to do one ’s work can undermine
intrinsic motivation and creativity in organizations, clear ultimate goals for the work can sup-
port intrinsic motivation by providing a structure for focusing creative efforts (e.g. Shalley,
1995 ). Moreover, as we explain below, certain forms of reward can be beneficial for both
intrinsic motivation and creativity in organizations.
Before effects of the work environment on the passion for creativity can be fully under-
stood, it is important to define the basic concepts. Creativity within an organization is the
production of novel, appropriate ideas by individuals or small groups. Those ideas can
appear in any organizational activity, and are not limited to the domains usually considered
to be “ creative ” (such as R & D, marketing, and strategy formulation). Innovation is the suc-
cessful implementation of creative ideas by an organization. Notice that ideas cannot be
merely new to be considered creative; they must be somehow appropriate to the problem
or task at hand. Notice also that it is possible to have many creative contributions – that is,
a great deal of creative behavior by individual employees or teams – without having any
significant innovation within an organization. This outcome will arise if the new ideas are
not communicated or developed effectively within the organization. However, it is not poss-
ible to have much innovation in an organization without considerable creativity.
Contrary to popular notions that creativity is the sole province of a few rare geniuses,
creativity appears across most levels of human ability. Reviews of the literature suggest
that, at low levels of intelligence, creativity is relatively low. However, at higher levels of
intelligence ( from slightly above average up to genius levels), all levels of creativity are
found . In other words, the variability in creativity is much greater for higher levels of intel-
ligence than for lower levels of intelligence (e.g. Stein, 1968 ; Wallach, 1971 ).
This suggests a continuum of creativity from the simplest “ garden variety ” ideas for
small improvements to the highest levels of creative achievement in any fi eld. Certainly,
products at the highest levels of creativity appear to be qualitatively different from prod-
ucts at the lower levels; it seems odd to compare the invention of the microcomputer
with an incrementally improved microcomputer processor. However, the underlying
processes do appear to be the same. A useful analogy comes from work in dynamic
systems, which has shown that the different gaits of a horse on a treadmill (walking, trot-
ting, cantering, and galloping) appear to be qualitatively different activities. Yet these
qualitatively different outcomes arise from gradual quantitative increases in the underly-
ing system: the speed of the treadmill and the energy output of the horse. Similarly, it is
quite possible that the most astonishing human accomplishments come about by people
doing more, and better, work than goes into the more ordinary instances of creativity in
everyday life.
c26.indd Sec2:483 6/17/09 3:18:48 PM
483STIMULATE CREATIVITY BY FUELING PASSION
CONTEXTUAL FACTORS: FEATURES OF THE WORK ENVIRONMENT
Several specific features of the work environment can influence intrinsic motivation and
creativity. Challenge, a sense of having to work hard on personally important, enriched,
and meaningful tasks, appears to be crucial (see Chapter 6 , this volume). Autonomy , a sense
of freedom in how to carry out one ’s work, also plays a significant role (see Chapter 11 ,
this volume). Workgroup supports include feelings of mutual support for ideas, constructive
feedback on ideas, and shared commitment to the work within a team; they also include
a broad diversity of skills and backgrounds within the team. Diversity of skills and back-
grounds can even mean including individuals lacking “ standard ” areas of expertise.
Supervisory encouragement includes setting clear strategic goals for a project (while allowing the
operational autonomy that is important for creativity), encouraging open communi cation
and collaboration within the team, giving useful, positive feedback on ideas, and support-
ing the workgroup within the organization (see Chapter 15 , this volume). Organizational
encouragement is the sense that top management encourages, supports, and recognizes cre-
ative work (even when that work might not ultimately lead to a successful product), that
there are mechanisms for fairly considering new ideas, and that the entire organization
collaborates and cooperates to develop new ideas. Organizational impediments can have nega-
tive effects on intrinsic motivation and creativity; these include political problems within
an organization, extremely negative criticism of new ideas, and an emphasis on maintain-
ing the status quo.
All of these features have been identified through research within organizations (e.g.
Amabile, Schatzel, Moneta and Kramer, 2004 ; Amabile and Gryskiewicz, 1987 ; Andrews
and Farris, 1967 ; Carson and Carson, 1993 ; Leonard and Swap, 1999 ; Oldham and
Cummings, 1996 ; Pelz and Andrews, 1976 ; Stahl and Koser, 1978 ; Tierney and Farmer,
2002 ; Zhou, 1998 , 2003 ). One study that used a validated instrument to assess the work
environment (Amabile, 1995 ), and obtained outcome measures from independent expert
assessments of creativity, demonstrated that these work environment factors distinguished
organizational teams producing highly creative work from those whose work was disappoint-
ingly uncreative (Amabile et al., 1996 ).
Note that two of the contextual features that relate to creativity stem from the nature
of the work and how it is presented to an individual. A sense of positive challenge arises
from the person’s perception that the work uses and develops a set of important skills to
accomplish an important goal. A sense of freedom arises from the extent to which the
person has control over and discretion in carrying out the work. Because these features
capture several aspects of the job characteristics model (Hackman and Oldham, 1980 ),
job design must be considered an important part of the context for creativity.
Supervisors and group leaders play a key role in creating a suitable work environment
for creativity. For example, recent studies have found supervisory support linked with higher
creativity (Amabile et al., 2004 ), but more controlling supervisory behavior linked with
lower creativity (Zhou, 2003 ). Another study found that even dissatisfied employees ’ creativity
can be enhanced through a work environment in which they are supported and encou r-
aged to share their views (Zhou and George, 2001 ). Creating such an environment can
have benefi ts beyond stimulating creativity; one study found that workers who have appro-
priate support and autonomy to do challenging, creative work tend to be more satisfi ed
and intend to stay longer with their organizations (Shalley, Gilson, and Blum, 2000 ).
c26.indd Sec2:484 6/17/09 3:18:48 PM
484 T ERESA M. A MABILE AND C OLIN M. F ISHER
DETERMINING FACTORS
The creative process is generally conceived as composed of four basic stages: problem
definition or problem finding, when people try to understand or articulate the specifi c
problem to be solved; preparation, when they gather potentially relevant information from
a number of sources; idea - generation, when they try to come up with interesting candidate
ideas among which to select; and validation/communication, when the final idea is worked
through and communicated to others (Amabile, 1996 ). These stages may occur iterative-
ly or non - linearly over time, or in a more immediate and improvisational fashion (Fisher
and Amabile, 2008 ). Intrinsic motivation appears to have its strongest influence in the problem - definition
and idea - generation stages. Both of these stages require particularly flexible thinking and deep
involvement in the problem. It appears that intrinsic motivation fosters just this sort of
thinking process. One study discovered that people who were more intrinsically motivated
toward doing work in a particular domain (verbal activities or problem solving) produced
work that was independently judged as more creative (Ruscio, Whitney, and Amabile,
1998 ). Moreover, people who were intrinsically motivated were more likely to engage in
exploratory, set - breaking behaviors while they were working on the task; that is, they were
more likely to take novel, flexible approaches to the activity as they were trying to fi gure out
how to tackle it. And intrinsically motivated people were more likely to concentrate on the
activity, becoming deeply involved cognitively in it. Importantly, involvement mediated the
effect of intrinsic motivation on creativity; in other words, intrinsic motivation appeared to
influence creativity primarily because it influenced depth of involvement in the task.
Thus, the creative process can be thought of as a maze that the problem solver has to navi-
gate; getting out of the maze is analogous to finding a satisfactory solution to the pro blem.
Following a familiar, straightforward path for solving problems of that type does indeed lead
to an exit. However, such approaches to problems are unlikely to yield creative solutions. In
order to discover those more creative solutions – those other ways out of the maze – it is necess-
ary to deviate from the familiar, and to take the risk of running into a dead end. If people
are primarily extrinsically motivated, they are motivated by something outside of the maze –
by a reward or a deadline set by someone else, for example. Under these work environment
circumstances, they are unlikely to get very involved in the problem itself or do much explo-
ration for a new solution. But if people are primarily intrinsically motivated – if they have a
basic interest in the task and if their work environment allows them to retain that intrinsic
focus – they enjoy the process of exploring for one of those more creative solutions.
Some research suggests a connection between positive affect, intrinsic motivation, and creativity.
Experiments demonstrating a negative impact of extrinsic constraint on intrinsic motivation
and creativity generally reveal that people not working under extrinsic constraint feel better
about the experience and about the work that they have done (e.g. Amabile, 1979; Amabile
et al., 1986 ). Moreover, in addition to experimental evidence that induced positive affect
produces more flexible thinking (e.g. Isen, Daubman, and Nowicki, 1987 ), there is evidence
inside organizations. A recent field study of the daily experiences of workers in seven com-
panies found that the level of positive mood on a given day predicted creativity that day as
well as the next day (taking the next day ’s mood into account) (Amabile, Barsade, Mueller,
and Staw, 2005 ). This suggests that positive work environments might infl uence intrinsic
motivation in part by influencing how happy people feel about their work.
Certainly, the work environment ’s impact on motivation is not the only determinant
of creativity. To stimulate creative productivity, managers should not only engineer supportive
c26.indd Sec2:485 6/17/09 3:18:48 PM
485 STIMULATE CREATIVITY BY FUELING PASSION
work environments (Amabile et al., 2004 ), they should also select for employees who demonstrate
high levels of each of the individual components of creativity (see Amabile, 1983 , 1996 ), and they
should help to develop those components. The first component is expertise, or skill in the
domain where the person will be working. This expertise is a function of the person’s tal-
ent in the domain, as well as formal and informal education and experience. Not sur-
prisingly, research has shown that, all else being equal, people are more creative if they
have more education and experience in a field (McDermid, 1965 ; Scott and Bruce, 1994 ).
The second component is a set of creativity - relevant processes stemming from the per-
son’s personality, cognitive style, and working style. In general, people produce more creative
work if they are oriented toward risk - taking and independence, if they know how to take new perspectives
on problems and question basic assumptions, if they have a high tolerance for ambiguity, and if they work
hard by energetically and persistently pursuing the problems they are trying to solve (MacKinnon, 1965 ;
Feist, 1999 ). The third component is intrinsic motivation. Although – as discussed above –
intrinsic motivation can be influenced positively or negatively by extrinsic constraints in
the work environment, people do differ from each other in their baseline levels of intrinsic
and extrinsic motivation. Research has shown that there are stable individual differences
in people ’s basic intrinsic motivation toward work (which can be broken down into chal-
lenge motivation and enjoyment motivation) and their basic extrinsic motivation toward
work (which can be broken down into recognition motivation and compensation motiv-
ation) (Amabile et al., 1994 ). These basic intrinsic and extrinsic motivational orientations
are more or less orthogonal, however; it is possible for people to be high on both intrinsic
and extrinsic motives, high on neither, or high on only one. Recent research supports the
importance of individual employees ’ intrinsic motivation orientation to their creativity at
work (Munoz - Doyague, Gonzalez - Alvarez, and Nieto, 2008 ).
A person’s creativity skill (the second creativity component) can interact with features of the work context
to influence the level of creative output (Shalley, Zhou, and Oldham, 2004 ). One study demon-
strated that technical employees were most likely to produce patent disclosures and receive
high ratings on creativity from their supervisors if they not only scored high on a test of
individual creative personality, but also if they had both complex jobs and non - controlling,
supportive supervisors (Oldham and Cummings, 1996 ).
Further, for individuals to aggregate their knowledge and skills to create creative pro-
ducts in a group, several group processes are necessary. For instance, one study showed that,
although the three individual creativity components were important in predicting individ-
ual differences, group creativity was an aggregate of each individual ’ s creativity only when
the group engaged in certain behaviors. These behaviors, termed “ team creativity - relevant
processes, ” included such activities as effective communication, providing feedback during group tasks,
and addressing conflict when it occurs (Taggar, 2002 ). Another study also showed that, in cross -
functional teams, freedom to express doubts and effective management of disagreements
was associated with higher levels of creativity (Lovelace, Shapiro, and Weingart, 2001 ) (see
Chapter 18 , this volume).
EXCEPTIONS TO THE BASIC PRINCIPLE
The research evidence overwhelmingly points to the importance of intrinsic motivation for
creativity. However, under some circumstances, certain forms of extrinsic motivation may
support intrinsic motivation and creativity – or at least not undermine it (Amabile, 1993 ).
c26.indd Sec2:486 6/17/09 3:18:49 PM
486 T ERESA M. A MABILE AND C OLIN M. F ISHER
This “ motivational synergy” is most likely to occur when people start out highly intrins-
ically motivated to do their work, and when the extrinsic motivators are limited primarily
to the stages of the creative process that involve the preparation to generate ideas or the
validation and communication of the final idea. Synergistic effects are unlikely when people feel
that the extrinsic motivator – say, a reward – is being used to control their behavior . Synergistic effects
are likely, however, when people feel that the reward confirms their competence and the
value of their work, or enables them to do work that they were already interested in doing.
There is considerable evidence that such “ informational ” and “ enabling ” rewards can
have powerfully positive effects on intrinsic motivation (see Deci and Ryan, 1985 ).
In addition, three specific features of the social work environment require qualification: competition, time
pressure, and resources. First, competition appears to have different effects on creativity depending
on the locus of the competition (Amabile, 1982, 1987; Amabile and Gryskiewicz, 1987 ).
When people are competing with peers (peers with whom they might ideally be sharing
information), their creativity seems to be dampened. However, when they are competing
with outside groups or organizations, creativity may be stimulated. Second, time press-
ure appears to have somewhat paradoxical effects although, overall, there appears to be
a somewhat negative impact of time pressure on organizational creativity (Amabile and
Gryskiewicz, 1987 ; Amabile et al., 1996 ; Amabile, Hadley, and Kramer, 2002 ). Research
suggests that, when time pressure is unavoidable, the type of time pressure matters
(Amabile et al., 2002 ). If people ’s time is fragmented by a large number of demands unre-
lated to centrally important problems (the most common form of time pressure in organiz-
ations), creativity suffers. On the other hand, if people believe that there is a real urgency
to solve the problem, because their unit, their organization, or the world has a clear need
for a swift resolution, they may be spurred on to higher levels of creativity by that time
pressure – as long as they are protected from unrelated interruptions and allowed to focus
on the central problem (a set of conditions that is relatively rare in organizations). The
effects of time pressure on creativity, though, require ongoing research; one recent study
found that, for certain employees and under certain conditions, a moderate degree of time
pressure appears to be optimal for creative performance (Baer and Oldham, 2006 ). Third,
the availability of tangible and intangible resources for projects has somewhat complex
effects (Amabile and Gryskiewicz, 1987 ; Amabile et al., 1996 ). Although, in general, an
insuffi ciency of resources is associated with lower levels of creativity, there may be a thresh-
old effect. That is, although it is rare to find high levels of creativity when resources are
extremely scarce, adding resources above a sufficient level may not add to creativity.
Although the vast majority of studies on contextual effects on creativity have focused
on the social work environment rather than the physical work environment, there is a
small body of research suggesting that the physical environment may play a role . Specifi cally,
it appears that people who work in densely crowded spaces that provide little protection
from unwanted intrusions exhibit lower levels of creativity than those who work in more
protected spaces (Aiello, DeRisi, Epstein, and Karlin, 1977 ; Alencar and Bruno - Faria,
1997 ). Nonetheless, the weight of research evidence suggests that the social environment
is a more powerful infl uence than the physical one.
IMPLEMENTATION
Managers can directly affect employee ’s intrinsic motivation and creativity by the ways in
which they construct assignments, teams, and work environments. The research suggests
c26.indd Sec2:487 6/17/09 3:18:49 PM
487 STIMULATE CREATIVITY BY FUELING PASSION
that it is important to select people not only on the basis of their skills but also on the basis of their
interests. People should be matched to projects that will effectively use their best skills and
tap into their strongest passions. Teams should be formed so that, as long as they have
some common language for discussing the problem at hand, the team members represent a
diversity of backgrounds and perspectives. Team leaders and direct supervisors should clearly communicate
overall strategic goals for a project, but allow the individuals working on the problem to make decisions
about how to accomplish those goals. Supervisors and peers should be genuinely open to new
ideas, but should also give constructively challenging feedback on those ideas. Top - level
managers should clearly communicate their desire for creative ideas throughout the organization , recogniz-
ing such ideas when they occur, and rewarding creative work with additional resources that
will enable people to do work that excites them. In general, creativity should be rewarded
in ways that convey information about the sort of performance the organization values
most highly. Moreover, there should be mechanisms to foster idea - sharing and general com-
munication about work across the organization, as well as mechanisms for containing
turf battles and political problems. Finally, suffi cient resources should be provided for crea-
tive projects, and there should be a careful examination of timeframes and an avoidance of
extremely tight or arbitrary deadlines where possible.
Some specific tools can be useful for fostering creativity in organizations. Techniques for
creative thinking, such as the Creative Problem Solving (CPS) process, appear to increase
the fl uency, flexibility, and originality of people ’ s thinking to some extent (e.g. Puccio,
Firestien, Coyle, and Masucci, 2006 ). The paper- and - pencil instrument KEYS: Assessing
the Climate for Creativity can diagnose an organization’ s work environment stimulants and
obstacles to creativity (Amabile, 1995 ; Amabile, Burnside, and Gryskiewicz, 1999 ). And an
“ innovation offi ce ” within a company can serve as a mechanism for improving the care
and attention given to new ideas. However, setting up an innovation office, or hiring con-
sultants to “ teach ” creativity skills or conduct a work environment assessment, will most
likely backfi re unless such actions are accompanied by a deep management commitment to
understanding and improving the context for creativity for the long term .
CASE EXAMPLES
1
Karpenter vs. O ’ Reilly
As Dwight Walton, the CEO of Karpenter Corporation, looked out across the mani-
cured lawns of his company ’s sprawling suburban campus, he wondered whether there
was a problem in his largest division – Karpenter Indoor Living and Home Maintenance
(ILHM). Karpenter was one of the dominant names in power tools and appliances – its
products appeared in nearly 80% of American homes – and was among the most highly
1
Karpenter and O’Reilly are pseudonyms for two real companies we studied. Over the
course of several months, we collected daily diary entries from teams doing creative work
in seven organizations. Names and facts about the companies, teams, projects, and indi-
viduals are somewhat disguised to protect confidentiality. The character of Heather Shaw
and the vignette presented here are fictional; however, they represent the general fi ndings
of our study.
c26.indd Sec2:488 6/17/09 3:18:49 PM
488 T ERESA M. A MABILE AND C OLIN M. F ISHER
regarded companies in the world. Much of Karpenter ’s success came from ILHM, which
had created and managed the products that accounted for a healthy portion of the
company ’s revenue. Cross - functional teams within this division were responsible for all
aspects of a particular product line (e.g. power tools, food preparation equipment) and
were composed of members from R & D, marketing, manufacturing, and fi nance. Along
with maintaining their current product offerings, these teams were responsible for design-
ing and developing many of the new Karpenter products.
Despite Karpenter ’s long - running success, Walton was concerned that this year ’s pro-
fits looked less certain. Moreover, the stream of creative products from ILHM had slowed
considerably and a few key employees had left in recent months. He began to wonder
what was causing these problems; ILHM teams had been successful for many years by
leveraging diverse perspectives from across the company and using well the high degree
of autonomy they had traditionally had in running their product lines.
Fortuitously, Walton’s next meeting was with Heather Shaw – an outside consultant,
who had collected data about the daily work experiences of ILHM teams, as well as teams
from six other organizations. During his last meeting with Shaw, Walton had asked her to
see if there was anything she had found that might help explain the drop in creative pro-
ductivity. As he cleared away the papers from his prior meeting, he wondered if Shaw
could tell him anything useful.
In her presentation, Shaw began by telling Walton that the ILHM teams had the
lowest ratings of intrinsic motivation of any teams she had studied, explaining intrinsic
motivation and its link to creativity.
“ How can that be? ” interrupted Walton. “ These teams have autonomy, exciting chal-
lenges, and support for their work – all the things that they told me in b - school should
increase intrinsic motivation. ”
“ Yes, those things do help – when they are experienced that way by your employees, ”
Shaw answered. “ But, it looks as if your people don’t feel that they have a real say in how
to do their work and have trouble getting other units and their supervisors to support their
ideas and decisions. ”
Shaw then explained that, despite the teams ’ nominal autonomy, divisional manage-
ment often made decisions without consulting or informing the team. Without naming
specific individuals or divulging any details about the confidential diary data that the div-
isional team members had sent her for a period of time, she described the ways in which
intrinsic motivation was systematically being stifled. The diaries that Shaw had analyzed
contained powerful information about how things had changed since a new ILHM mana-
gement team had come on board a year earlier. As one team member recounted:
Once again, Dean [divisional VP of R & D] has struck. Without informing ANYONE
on the team, he has the CAD department redesigning one of our products. The team
doesn’t even know if we want to work on this project at all this year. (Theoretically,
we have control of our capital budget and we have much higher priorities, with much
greater potential to improve the bottom line, than this project) . . . So, the team is
responsible for the outcome of our business, but someone else is making the decisions
that seal our fate. And, not only are they making these decisions, but we have to fi nd
out by accident because they don’t have the common courtesy to inform us of what
they are doing. Just f - - king wonderful!!
c26.indd Sec2:489 6/17/09 3:18:49 PM
489 STIMULATE CREATIVITY BY FUELING PASSION
“ You may have told these teams that they have autonomy over decisions about what
to work on, ” Shaw continued. “ But, in practice, your people aren’t experiencing it that
way. Making decisions for a supposedly autonomous team will decrease the team ’s percep-
tions of ownership of their work, and, thus, intrinsic motivation. Failing to consult or even
inform them only lowers motivation further, by arousing anger and frustration, and lead-
ing to perceptions that they are not valued by the organization. ”
As Walton listened stoically, Shaw began to explain how organizational and super-
visory supports for the teams ’ initiatives were also lacking. She gave several examples of
times when a team created a new product but had trouble coordinating with other parts
of the organization. Not only were requests for help from central departments, such as
manufacturing, not granted, but again, the team was not informed about decisions that
affected their pro ducts. As described in a team member ’s diary:
We have been working very hard to get production running, so we can fi ll a huge order
that has a very tight deadline. Yesterday, production was up and running, and everyone
breathed a sigh of relief. But, when we came in this morning, we found out (again by
accident, because no one made the effort to tell us) that Manufacturing had shut down
production and was refusing to start back up until all the packaging arrived. The pack-
aging was due today, and they had an empty warehouse to stage the parts until it got
there. But, without asking/threatening/informing anyone on the team, they just did
what they damn well pleased. By the way, they defi nitely knew this was a hot order, but
they just shrugged their shoulders and said it wouldn’t be their fault if the order didn’t
ship. Where in the hell are the common goals, communication and sharing, and team-
work that top management claim they are fostering in this organization?? I ’ m sure not
seeing much evidence.
Shaw told Walton that there were several specific instances showing a lack of organiz-
ational support for team innovative efforts, and she described the general nature of those
instances.
Further, team members within ILHM felt they received mixed messages from leadership –
including their team leaders, division leaders, and even top corporate leaders, about inno-
vation priorities:
Had meetings with Steve (team leader), Allen (finance person on the team), and Beth
(product development head for the team), to discuss how to reposition our proposal
for a new hand - held mixer. This project has taken over 1 year to develop, mainly
because the division’s Management Team [MT] continually asked for more analysis,
and R & D was slow in developing a reasonable technology to create a soft grip handle.
Finally, the team rallied to present a viable project which the MT approved, only to
have the COO say he wants a hard grip handle [instead,] at a $ 5 lower retail. Steve
waffles back and forth. Allen is very helpful in running the financials and giving
meaningful discussion on the subject. Beth is contrary on most points – really doesn’t
seem to care one way or the other. Very frustrating project, getting little support from
Corporate, MT, or key team members other than myself and Allen. Yet, all agree that
the competitive situation is becoming desperate – especially since Boltmann [a key
competitor] has just come out with yet another new hand - held mixer. I ’ m still trying
to catch up to their last new mixer – UGH! Result was that Allen and I have prepared
yet another proposal to show the MT tomorrow, but I need to get Steve to buy in; not
sure which way he will go.
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490 T ERESA M. A MABILE AND C OLIN M. F ISHER
Because of problems coordinating and communicating with the rest of the organization
and mixed messages about what to work on, this team ultimately failed to come up with a
new product to successfully challenge Boltmann’s competitive position.
“ The people you need to come up with creative ideas are having trouble coordinating
and communicating with other parts of the organization, which leads to trouble even within
the teams; this means they devote a lot of energy to this, rather than developing products.
Also, they don’t feel respected or supported in their work and ideas, ” Shaw said. “ I think
you need to address these issues in order to increase the intrinsic motivation that is so
essential to creativity. ”
“ So, there are people who don’t like their bosses and get frustrated by the reality of
working in a big organization, ” muttered Walton. “ You show me a place that doesn’t have
problems like that . . . ”
“ Actually, ” said Shaw, “ that ’s exactly what I ’d like to do. ”
Shaw proceeded to tell Walton about another company she had studied (without
divulging its identity) – O ’ Reilly Coated Materials. O ’ Reilly was considered an innovative
leader in the coated and laminated fabrics industry. Its core products included industrial
goods, such as awnings, canopies, tents, and military supplies, and consumer products,
such as luggage, toys, and sports equipment. O ’ Reilly was just coming off another strong
fiscal year. The motor behind this impressive performance was O ’ Reilly Central Research
(OCR), which was composed of teams of scientists and technicians responsible for creat-
ing the new products and innovations to keep the company healthy.
Protecting the confidentiality of the O ’ Reilly company, teams, projects, and individ-
uals, Shaw used her analysis of the OCR diaries to tell Walton of specific factors sup-
porting intrinsic motivation and creativity there. In contrast to the reports about feeling
disrespected, unsupported, and micro - managed at ILHM, OCR teams reported norms of
cooperation and support across the organization. As one OCR team member reported:
Met with a number of contributors to the project – people in the Research Analyses
group [at OCR] who have helped tremendously, although they are not offi cially team
members – to get them to present their contributions at the project review. Meetings
went well and I am glad that they will get a chance to show their contribution to the
success [of this project].
Supervisory support was also commonly mentioned by the OCR team members. One wrote:
Our VP/Director of R & D shared what he reported to the CEO, about OCR ’s very
significant contribution to the business of the Corporation this past [fi scal] year. This
makes us all feel very good and look forward to an even better year next year.
Another team member wrote:
The Gate review [project review by upper management, to decide whether to move on
to next stage] and the meetings with the Technical Directors of the divisions went very
well. They are completely supportive of all aspects of the project and were thrilled by
the progress the team has made over the last few months. I could not have asked for
anything more!!
“ In your ILHM teams, the diary entries I analyzed often focused on the many obstacles
and setbacks people had to overcome, ” Shaw explained. “At this other company, most of
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491 STIMULATE CREATIVITY BY FUELING PASSION
the entries described small steps forward in the work, or things in the work environment
that enabled people to make those steps forward. Those teams had considerable autono-
my, and were always consulted about possible modifications in project priorities. ” Walton
nodded and shifted uncomfortably in his chair. “ Your ILHM team members also reported
a lot of criticism and negative feedback, almost never reporting praise, ” she continued.
“ This was another point of contrast between the companies. ”
“ I think that the work environment here – the factors that are external to the cre ative
work itself – are interfering with your teams ’ creativity by undermining their intrinsic
motivation. It doesn’t have to be that way, though. This other company ’s teams rated their
mood, their work environment, and their intrinsic motivation much higher than your
teams did. Not surprisingly, their creative productivity was a lot higher, too. The differ-
ences can’t be explained away by individual personalities or skill levels; our measures of
those don’t show much difference between the two companies. ”
“ Although I ’ve mentioned that some of the other company ’s diaries expressed positive
emotions, it ’s really interesting that most of that company ’s diary entries did not express
any emotion at all, but instead talked about the work itself. In contrast, your ILHM teams
wrote extensively about their frustrations with the work environment created by superiors and
other parts of the organization. Regardless of how that came to be, you don’t want these
people thinking about their frustrations when you need them to focus on making great
new products – you want them thinking about the products. ”
As their meeting ended, Walton thanked Shaw for her work and saw her out. Despite
the report, Walton couldn’t shake the feeling that the comments from his workers were
little more than whining at the realities of organizational life. “ If my ILHM teams worked
harder and smarter, ” he thought, “ they ’d get the results we need. On the other hand,
maybe there are some things I could change to make it easier for them to focus on the
creative work I need them to do. . . . ”
Epilogue: As in our fictitious vignette, the real Karpenter top management team was
shocked to find out how frequently their team members experienced negative emotions,
how low their intrinsic motivation was, and the degree to which the team members per-
ceived management as overcontrolling, overly critical of new ideas, indecisive, and generally
unsupportive. All of these measures were far more positive at O ’ Reilly. So were measures
of creativity. Co - workers at Karpenter rated each other ’s creative contributions so low that
the averages had almost no overlap with the high co - worker ratings at O ’ Reilly. However,
even in the face of this evidence, Karpenter ’s top management believed the company ’s work
environment to be fundamentally healthy, with a suitable climate for improved creativity.
A year after our study ended, the poor motivation and low creativity exhibited by
Karpenter ’s ILHM employees caught up with the company; profits dropped dramatically.
A year later, Karpenter was taken over by a large conglomerate and eventually ceased to
exist. O ’ Reilly, on the other hand, continues as a healthy, profi table firm.
CONCLUSION
People do their most creative work when they are passionate about what they are
doing. Such high levels of intrinsic motivation are influenced both by a person’s
basic interest in a particular kind of work and by the work environment surrounding
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492 T ERESA M. A MABILE AND C OLIN M. F ISHER
the person. Managers can support creative productivity by matching people to
projects on the basis of interest as well as skill, by using rewards that recognize com-
petence and support further involvement in the work, and by establishing a work
environment across the organization – from the level of top management to the
level of workgroups – that removes the barriers and enhances the supports to active,
collaborative, intrinsic involvement in the work.
In establishing that work environment, managers should strive first to remove
micromanagement of creative work and limit excessive time pressure, particularly
time pressure when workdays are marked by fragmented demands unrelated to the
organization’s most important creative work. They should also take steps to calm
political problems that play out on the battlefield of creativity, resulting in excessive
criticism of new ideas and an emphasis on maintaining the status quo. Managers
can enhance supports for intrinsic involvement in the work by giving people tasks
that are meaningful to them and that positively challenge their skills. Middle - level
managers should form workgroups that combine diverse perspectives and talents,
and then facilitate the members of those groups to work collaboratively as they
both support and constructively challenge each other ’s ideas. Low - level managers –
immediate supervisors – should set clear overall goals for projects, but give people
as much operational autonomy as possible; they should also serve as champions
for creative projects in the organization. Top organizational leaders can provide
encouragement and support for creative work in a number of ways, including the
establishment of well - coordinated mechanisms for developing new ideas and sys-
tems for recognizing and rewarding creative efforts. Perhaps most importantly, the
passion for creativity can be stimulated by an open flow of ideas across an organiz-
ation in which people feel safe to give honest, constructive feedback on someone
else ’ s brainchild – and to fearlessly share their own.
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EXERCISES
“ Scribbles ”
To illustrate in real time a few “ creativity killers ” – environmental factors that undermine
creativity by lowering intrinsic motivation – you will instruct students to make a creative
drawing out of a scribble under tight time pressure, surveillance, constraint, peer compe-
tition, and unclear/meaningless goals, with external evaluation looming. This exercise takes
15 – 30 minutes and is best used at the very beginning of a workshop/class on creativity.
To run this exercise, first tell the class that they are going to take a short test of their
individual creativity. Emphasize the word “ test ” during the instructions, and continue to
remind them that their test will be evaluated – judged by their classmates according to a
procedure that you will explain after the test. Tell them that this test is used for assessing
artistic creativity, but is also a good indicator of their overall levels of creativity. Make sure
that all class members have a blank sheet of paper and a pen or pencil. Have students
draw a single, large scribble or squiggle on their page and then stop. Then, have stu-
dents exchange their papers with another person near them and put their names on the
new paper (which has someone else ’s scribble). Tell the class they will have two minutes
to make a creative drawing based on this scribble and give it a creative title. Then give
the signal for them to start. As students make their drawings, move throughout the room
and look at students ’ drawings. In reality, give students somewhat less than two minutes
( perhaps 90 seconds), and announce how much time is remaining every 30 seconds when
there is one minute left. When there are 30 seconds remaining, remind students to give
their drawing a creative title. Count down the last 10 seconds aloud. Then say, “ Stop!
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496 T ERESA M. A MABILE AND C OLIN M. F ISHER
Pencils down! ” and have all students pass in their drawings. There is likely to be much
nervous laughter among students during the exercise, and it is fine for you to maintain a
pleasant demeanor. When drawings are being passed in, begin to make the atmosphere
truly light and fun by inviting students to glance at the drawings as they go by.
After you have the drawings, begin by assuring students that their creations will not
actually be judged, and that the reason for the exercise was to give everyone the same
shared experience of trying to be creative on the same thing at the same point in time.
Then debrief the class on their experience of creating something that was supposed to
represent their true creativity, asking them to focus on any factors that made it diffi cult
to be creative. Record their comments on the blackboard in three columns correspond-
ing to the three creativity components. After taking comments for a few minutes (ideally
waiting until the major work environment impediments have been mentioned), label these
columns “ task expertise, ” “ creative thinking skills, ” and “ work environment→intrinsic
motivation. ” Emphasize that this task was not really a test of creativity, but a demonstra-
tion of what happens to intrinsic motivation and creativity when people are told to “ be
creative ” in a work environment full of extrinsic constraints and extrinsic motivators. The
debriefing should include a brief explanation of intrinsic motivation and the other two com-
ponents of creativity, extrinsic constraints/motivators, and the intrinsic motivation prin-
ciple of creativity. For an additional element of fun at the end of the class or workshop,
spread out the drawings on an empty table for an informal “ art show.”
Your ideal work environment
The purpose of this exercise is to allow students to think about the sort of organizational
work environment that they should seek (or create) for their future career moves, if they
wish to optimize their own opportunities for creative work. It takes about 30 – 45 minutes,
depending on how much time you allocate for discussion.
In this exercise, students will rate how important various aspects of their work environ-
ment are for their own personal creativity. For that reason, the exercise is most appro-
priate after you have taught them about how various aspects of the work environment
can facilitate or impede creativity. Begin the exercise by asking them to reflect for a few
moments on their prior work experiences (or school - work experiences, if they have not
yet held jobs). They should try to recall, in detail, one or two instances in which they did
truly creative work, and think about the work environment surrounding them in those
instances. Then they should recall, in detail, one or two instances in which their creativity
was blocked, and think about the work environment surrounding them in those instances.
Next, tell them that they will generalize from these instances (and others like them)
to the future work environments that might best support their own creativity. On a sheet
of paper (ideally, a form that you have prepared for them in advance), have students pri-
vately indicate whether they would like to HAVE or AVOID the following features of the
work environment. Then, they should indicate whether each of those features is VERY
IMPORTANT to them, SOMEWHAT IMPORTANT to them, or LESS IMPORTANT
to them. Remind them that they will likely have to make tradeoffs, that it is unrealistic to
rate everything as VERY IMPORTANT. This first part of the exercise (remembering spe-
cific instances and then completing the form individually) generally takes about 15 minutes.
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497 STIMULATE CREATIVITY BY FUELING PASSION
1. Freedom in deciding what work to do or how to do it.
2. A sense of challenge in your work – working hard on challenging or important projects.
3. Sufficient resources – including funds, materials, and information – to accomplish
the work.
4. Supervisory encouragement from a good work model who sets goals appropriately, sup-
ports the workgroup, values individual contributions, and shows confidence in the
workgroup.
5. Workgroup supports from people who are diversely skilled, communicate well, are open
to new ideas, constructively challenge each other ’s work, trust and help each other,
and feel committed to the work they are doing.
6. Organizational encouragement that promotes the fair, constructive judgment of ideas,
rewards and recognizes people for creative work, helps foster an active flow of new
ideas, and maintains a shared vision of what the organization is trying to do.
7. Organizational impediments, including internal political problems, harsh criticism of
new ideas, destructive internal competition, an avoidance of risk, and an overem-
phasis on the status quo.
8. Workload pressure, such as extreme time pressures, unrealistic expectations for produc-
tivity, or distractions from creative work.
After students have indicated whether they would like to HAVE or AVOID each fea-
ture of the work environment, and how important the features are to them, have them
brainstorm (in pairs or small groups) ways in which they can find or create their ideal work
environments. Have them consider the following questions: What sorts of companies and
industries should you look for? What sorts of companies and industries should you avoid?
What can you do to proactively create your ideal work environment? If there is time, you
may wish to continue with a whole - group discussion in which students share some of the
insights they developed through the individual exercise and the small - group discussions.
This exercise will help students identify those few key features that deserve most of their
attention as they look for jobs or think about establishing their own work environments.
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27
Manage Stress at Work through
Preventive and Proactive Coping
TABEA REUTER AND RALF SCHWARZER
Coping with stress at work can be defined as an effort by a person or an organization to
manage and overcome demands and critical events that pose a challenge, threat, harm, or
loss to that person and that person’s functioning or to the organization as a whole. Coping
can occur as a response to an event or in anticipation of upcoming demands, but it can
also involve a proactive approach to self - imposed goals and challenges.
Coping with stress is considered as one of the top skills inherent in effective managers.
In samples recruited from business, educational, health care, and state government organ-
izations, 402 highly effective managers were identified by peers and superiors. Interviews
revealed that coping was second on a list of 10 key skills attributed to managers. The man-
agement of time and stress was beneficial to the organization because the leaders were role
models for employees. Moreover, the executives themselves benefited from successful cop-
ing in terms of performance and health (Whetton and Cameron, 1993 ). This underscores
the importance of coping in the workplace. A host of research conducted during the last
three decades has found that poor adjustment to demanding or adverse work environ-
ments can lead to illness, in particular to high blood pressure and cardiovascular disease
(Kasl, 1996 ; Marmot, Bosma, Hemingway, Brunner, and Stansfeld, 1997 ; Siegrist, 1996 ;
Theorell and Karasek, 1996 ; Weidner, Boughal, Conner, Pieper, and Mendell, 1997 ).
This chapter outlines an approach to coping that makes a distinction between four per-
spectives, namely reactive coping, anticipatory coping, preventive coping, and proactive
coping. This distinction is based on time - related stress appraisals and on the perceived
certainty of critical events or demands. Reactive coping refers to harm or loss experienced
in the past, whereas anticipatory coping pertains to inevitable threats in the near future.
Preventive coping refers to uncertain threats in the distant future, and proactive coping
involves future challenges that are seen as self - promoting.
In addition to this approach, numerous ways of coping are presented, and their use at
the level of organizations and at the level of individuals is discussed. To begin with, the
nature of stress at work will be described.
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500 T ABEA R EUTER AND R ALF SCHWARZER
STRESS AT WORK
The experience of stress
The workplace provides numerous sources of stress. The job itself might involve diffi cult
and demanding tasks that tax or exceed the coping resources of the employee. The role of
an individual within the organization might be ambiguous or might even be the cause
of frequent conflicts. Relationships at work could entail friction and impair functioning
or motivation. Career development might be restricted or echo a constant struggle for
acknowledgment. The organizational climate might reflect a battleground for competition.
Further, it is possible that all of these examples are aggravated by non - work factors that
interact with job stress. Adverse conditions are one of the factors that constitute or set the
stage for experiencing stress, such as working shifts, long hours, place of work, work over-
load, frequent travel, speed of change, and new technology. Often - cited stressors are job
insecurity, friction with bosses, subordinates, or colleagues, and role conflict or ambiguity
(Cartwright and Cooper, 1997 ; Quick, Quick, Nelson, and Hurrell, 1997 ).
Surveys have found a “ growing epidemic of stress ” (Quick et al., 1997 ). This does not
necessarily indicate that people experience more stress now than they did earlier in their
lives, or more stress than earlier generations. Instead, it may signify greater public aware-
ness of the stress phenomenon and the existence of a handy label for a common feeling.
Research on the prevalence of stress is difficult because the term is not clearly defi ned.
In the public health literature, and likewise in industrial and organizational psychology, a
distinction is sometimes made between “ objective stress, ” also called stressor, and “ subjec-
tive stress, ” also called strain or distress. The former is used in research as an independ-
ent variable, and the latter as a dependent variable. However, in mainstream psychology,
stimulus - based and response - based definitions have become less prevalent. Instead, trans-
actional conceptions are widely accepted, in which stress is understood as a complex pro-
cess, rather than as a descriptive variable or as a single explanatory concept.
Cognitive - transactional theory of stress
Cognitive - transactional theory defines stress as a particular relationship between the per-
son and the environment that is appraised by the person as taxing or exceeding his or
her resources and endangering his or her well - being. Lazarus ( 1991 ) conceives stress as an
active, unfolding process that is composed of causal antecedents, mediating processes, and
effects. Antecedents are person variables, such as commitments or beliefs, and environmental
variables, such as demands or situational constraints . Mediating processes refer to coping and
appraisals of demands and resources. Experiencing stress and coping bring about both
immediate effects, such as affect or physiological changes, and long - term effects concerning
psychological well - being, somatic health, and social functioning (see Figure 27.1 ).
Cognitive appraisals comprise two simultaneous processes, namely primary (demand)
appraisals and secondary (resource) appraisals. The terms primary and secondary apprais-
als have been often misunderstood as reflecting a temporal order which was not meant by
Lazarus (personal communication). Therefore, demand and resource appraisals are better
terms. Appraisal outcomes are divided into the categories challenge, threat, and harm/loss.
First, demand appraisal refers to one ’s evaluation of a situation or event as a potential hazard.
c27.indd 501 6/17/09 3:19:57 PM
MANAGE STRESS AT WORK THROUGH PREVENTIVE AND PROACTIVE COPING 501
Resources
Material
Personal
Social
Appraisals
Challenge
Threat
Harm or loss
Demands
Physical demands
Task demands
Role demands
Interpersonal demands
Coping
Reactive
Anticipatory
Preventive
Proactive
Consequences
Behavioral
Social
Psychological
Physiological
FIGURE 27.1 A process model of stress and coping
Second, resource appraisals refer to one ’ s available coping options for dealing with the
demands at hand. The individual evaluates his or her competence, social support, and
material or other resources that can help to readapt to the circumstances and to reestablish
an equilibrium between the person and the environment. Hobfoll ( 1989 ) has expanded stress
and coping theory with respect to the conservation of resources as the main human motive
in the struggle with stressful encounters.
Three outcome categories occur as a result of demand and resource appraisals: a
situation is appraised as challenging when it mobilizes physical and mental activity and
involvement. In the evaluation of challenge, a person may see an opportunity to prove
oneself, anticipating gain, mastery, or personal growth from the venture. The situation is
experienced as pleasant, exciting, and interesting, and the person feels ardent and con-
fident in being able to meet the demands. Threat occurs when the individual perceives
danger, anticipating physical injuries or blows to one ’s self - esteem. In the experience of
harm/loss, some damage has already occurred. This can be the injury or loss of valued
persons, important objects, self - worth, or social standing.
Assessment of stress
The main practical problem with transactional theories of stress is that there is no good
way of measuring stress as a process. Therefore, all common procedures to assess stress
are either stimulus based, pointing at critical events and demands, or response based,
pointing at symptoms and feelings experienced. Some procedures measure the frequency
or intensity of stressors, while others measure individual distress (strain). An example for
c27.indd 502 6/17/09 3:19:57 PM
502 T ABEA R EUTER AND R ALF SCHWARZER
a stimulus - based instrument is Spielberger ’s ( 1994 ) Job Stress Survey (JSS). It includes 30
items that describe stressors typically experienced by managerial, professional, and cleri-
cal employees. The respondents first rate the severity (intensity) of 30 job stressors (such
as excessive paperwork, poorly motivated co - workers). Next, they rate the same list once
more on a frequency scale. The two ratings result in scores that can be interpreted as state
and trait job stress. Other instruments deal with critical events at the workplace, hassles and
uplifts, and the work environment in general.
Response - based measures are available that entail symptoms, emotions, arousal, illness,
burnout, and behavioral changes. Job burnout, however, cannot be equated to stress,
but has to be seen as a long - term consequence of stress (Klusmann, Kunter, Trautwein,
L ü dtke, and Baumert, 2008 ; Maslach, Schaufeli, and Leiter, 2001 ; Schaufeli, and Bakker,
2004 ). The Maslach Burnout Inventory (MBI) is the standard measure in this fi eld
(Maslach, Jackson, and Leiter, 1996 ). Using measures for burnout, symptoms, mental
disorder, or illness to tap the concept of “ stress ” is questionable and misleading because
individual changes in these variables occur only at later stages of a stress episode. Thus,
stress is confounded with its consequences. Any use of stress inventories involves a particu-
lar definition of stress that is not always made transparent and may not even refl ect the
researcher’s theory.
In any case, no matter whether stimulus - based or response - based measures are used,
individuals respond to them with their coping resources in mind. The transactional per-
spective entails the relationship between demands and resources, which is viewed as caus-
ing the resulting emotional response.
COPING WITH STRESS AT WORK
Consequences of poor adjustment to stress at work
Stress is inevitable, but the degree of stress can be modified in two ways: by changing the
environment and by changing the individual. If coping attempts are unsuccessful, adverse
consequences will result. Job performance may decline and job satisfaction fade, burnout
symptoms emerge or accidents happen. Further, social relationships at work may become
tense, or mental and physical health could deteriorate, leading to sleep problems and sub-
stance abuse, etc. Poor adjustment to demanding or adverse work environments can lead
to a number of health conditions, in particular high blood pressure and cardiovascular
disease. The study of coping at the workplace has often been reduced to only a few vari-
ables, such as demands, control, decision latitude, social support, and opportunities for
relaxation and exercise. The literature on occupational health has documented an array
of findings where these variables were examined in relation to demand factors and popu-
lation characteristics. Adverse health outcomes have been demonstrated most often (Kasl,
1996 ; Marmot et al., 1997 ; Siegrist, 1996 ; Theorell and Karasek, 1996 ; Weidner et al.,
1997 ). Successful individual adjustment to stress at work depends partly on resources and
partly on the nature of the stress episode.
In the following section, coping resources are described, then dimensions and perspec-
tives of coping are examined that help to gain a better understanding of the psychological
meaning of coping.
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MANAGE STRESS AT WORK THROUGH PREVENTIVE AND PROACTIVE COPING 503
Antecedents of stress and coping: demands and resources
To characterize demands or situational stressors, Lazarus ( 1991 ) describes formal properties,
such as novelty, event uncertainty, ambiguity, and temporal aspects of stressful conditions. For
example, demands that are difficult, ambiguous, unexpected, unprepared, or are very time
consuming under time pressure, are more likely to induce threat than easy tasks that can
be prepared for thoroughly and solved at a convenient pace without time constraints. The
work environment can be evaluated with respect to the stakes inherent in a given situation.
For example, demanding social situations imply interpersonal threat, the danger of physical
injury is perceived as physical threat, and anticipated failures endangering self - worth indicate
ego threat. Lazarus additionally distinguishes between task - specific stress, including cognitive
demands and other formal task properties, and failure - induced stress, including evaluation
aspects such as social feedback, valence of goal, possibilities of failure, or actual failure. Large
and unfavorable task conditions combined with failure - inducing situational cues are likely to
provoke stress.
Personal resources refer to the internal coping options that are available in a particular
stressful encounter. Competence and skills have to match the work demands. Individuals
who are affluent, healthy, capable, and optimistic are resourceful, and, thus, they are less
vulnerable toward stress at work. Social competence, empathy, and assertiveness might
be necessary to deal with specific interpersonal demands. It is crucial to feel competent
to handle a stressful situation. But actual competence is not a sufficient prerequisite. If
the individual underestimates his or her potential for action, no adaptive strategies will
be developed. Therefore, perceived competence is crucial. This has been labeled “ per-
ceived self - efficacy ” or “ optimistic self - beliefs ” by Bandura (see Chapter 10 , this volume).
Perceived self - efficacy or optimism (as a state) are seen as a prerequisite for coping with all
kinds of stress, such as job loss, demotion, promotion, or work overload (Schwarzer and
Luszczynska, 2007 ). Job - specific self - efficacy has been studied (for example, teacher self -
effi cacy, Schwarzer and Hallum, 2008 ).
Social resources refer to the external coping options that are available to an individual in
a certain stressful encounter. Social integration reflects the individual ’ s embeddedness in a
network of social interactions, mutual assistance, attachment, and obligations. Social sup-
port reflects the actual or perceived coping assistance in critical situations (see review in
Schwarzer and Knoll, 2007 ). Social support has been defined in various ways, for example
as a resource provided by others, coping assistance, or an exchange of resources “ per-
ceived by the provider or the recipient to be intended to enhance the well - being of the
recipient ” (Shumaker and Brownell, 1984 , p. 13). Several types of social support have been
investigated, for instance instrumental, for example, assist with a problem, tangible help
such as goods, informational help such as advice, and emotional support such as giving
reassurance, among others.
Dimensions of coping
Many attempts have been made to reduce the universe of possible coping responses to a
parsimonious set of coping dimensions. Some researchers have come up with two basic
distinctions, that is, instrumental, attentive, vigilant, or confrontative coping, as opposed to
c27.indd 504 6/17/09 3:19:58 PM
504 T ABEA R EUTER AND R ALF SCHWARZER
avoidant, palliative, and emotional coping (for an overview see Schwarzer and Schwarzer,
1996 ). A related approach has been put forward by Lazarus ( 1991 ), who separates problem -
focused from emotion - focused coping, or by Locke (2005), who distinguishes between action -
focused and emotion - focused coping. Another conceptual distinction has been suggested
between assimilative and accommodative coping, whereby the former aims at modifying the
environment and the latter at modifying oneself (Brandtst ä dter, 1992 ). This pair has also
been coined “mastery versus meaning ” (Taylor, 1983 ) or “primary control versus secondary control ”
(Rothbaum, Weisz, and Snyder, 1982 ). These coping preferences may occur in a certain
time order when, for example, individuals first try to alter the demands that are at stake,
and, after failing, turn inwards to reinterpret their plight and find subjective meaning in it.
Four coping perspectives in terms of timing and certainty
Work demands can be continuous or changing. They can reflect an ongoing harmful
encounter, or they can exist in the near or distant future, creating a threat to someone who
feels incapable of matching the upcoming demands with the coping resources at hand.
Critical events at the workplace may have occurred in the past, leading to layoff, demo-
tion, or adverse restrictions. In light of the complexity of stressful episodes, coping can-
not be reduced to either relaxation or fight - and - flight responses. Coping depends, among
other factors, on the time perspective of the demands and the subjective certainty of the
events. Reactive coping refers to harm or loss experienced in the past, whereas anticipa-
tory coping pertains to inevitable threats in the near future. Preventive coping refers to
uncertain threats in the distant future, whereas proactive coping involves future challenges
that are seen as self - promoting (see Figure 27.2 ).
Certain
Reactive coping
Anticipatory coping
Proactive coping
Past harm/losses
Future threats and challenges
Preventive coping
Uncertain
FIGURE 27.2 Four coping perspectives
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MANAGE STRESS AT WORK THROUGH PREVENTIVE AND PROACTIVE COPING 505
Reactive coping. Reactive coping can be defined as an effort to deal with a stressful encoun-
ter that is ongoing or that has already happened, or with the aim to compensate for or to
accept harm or loss. Examples for loss or harm are job loss, failing a job interview, having
an accident at work, being criticized by the boss, or having been demoted. All of these
events happened in the past with absolute certainty; thus, the individual who needs to
cope has to either compensate for loss or alleviate harm. Another option is to readjust the
goals or to search for meaning to reconceptualize one ’s life (Locke, 2002 , 2005 ). Reactive
coping may be problem focused, emotion focused, or social - relations focused. For coping
with loss or harm, individuals have to be resilient. Since they aim at compensation or
recovery, they need “ recovery self - effi cacy, ” a particular optimistic belief in their capability
to overcome setbacks (Schwarzer, 2008 ).
Anticipatory coping. Anticipatory coping can be defined as an effort to deal with imminent
threat. In anticipatory coping, individuals face a critical event that is certain to occur in the
near future. Examples are speaking in public, a confrontation at a business meeting, a job
interview, adapting to a new job, increased workload, promotion, retirement, downsizing,
etc. There is a risk that the upcoming event may cause harm or loss later on, and the person
has to manage this perceived risk. The situation is appraised as an imminent threat. The
function of coping may lie in preparatory actions, for example practicing speaking to an
audience or solving the actual problem at hand through taking actions, such as increasing
effort, getting help, or investing other resources. Another function may lie in feeling good
in spite of the risk. For example, one could reframe the situation as less threatening, distract
oneself, or gain reassurance from others. Thus, anticipatory coping can also be understood
as the management of known risks, which includes investing one ’s resources to prevent or
combat the stressor. One of the resources is specific “ coping self - effi cacy. ” This is the opti-
mistic belief of being able to cope successfully with the particular situation.
Preventive coping. Preventive coping can be defined as an effort to build up general resistance
resources that result in less strain in the future (minimizing severity of impact), less severe
consequences of stress, should it occur, and less likely onset of stressful events in the fi rst
place. In preventive coping, individuals face the risk of a critical event that may or may
not occur in the distant future. Examples are job loss, forced retirement, physical impair-
ment, disaster, or poverty. The individual plans for the occurrence of such non - normative
life events that are potentially threatening. Again, coping equals risk management, but
here one has to manage various unknown risks in the distant future. The outlook creates
anxiety sufficient to stimulate a broad range of coping behaviors. Since all kinds of harm
or loss could materialize one day, the individual builds up general resistance resources,
accumulating wealth, insurance, social bonds, and skills (as in the case of anticipatory
coping), “ just in case. ” Skill development is a major coping process that helps to prevent
undesirable outcomes. General “ coping self - efficacy ” is a prerequisite to plan and successfully
initiate multifarious preventive actions that help build up resistance against threatening non -
normative life events in the distant future.
Proactive coping. Proactive coping can be defined as an effort to build up general resources
that facilitate promotion toward challenging goals and personal growth (Locke, 2002 , 2005 ).
In proactive coping, people have a vision. They see risks, demands, and opportunities in
c27.indd 506 6/17/09 3:19:59 PM
506 T ABEA R EUTER AND R ALF SCHWARZER
the far future, but they do not appraise these as threats, harm, or loss. Rather, they perceive
difficult situations as challenges. Coping becomes goal management instead of risk manage-
ment (Locke and Latham, 2002 , 2006 ). Individuals are not reactive, but proactive in the
sense that they initiate a constructive path of action and create opportunities for growth.
The proactive individual strives for improvement of life or work and builds up resources that
assure progress and quality of functioning. Proactively creating better work conditions and
higher performance levels is experienced as an opportunity to render life meaningful or to
fi nd purpose in life. Instead of strain, the individual experiences productive arousal and vital
energy along with perceived self - effi cacy.
Preventive and proactive coping are partly manifested in the same kinds of overt behav-
iors as skill development, resource accumulation, and long - term planning. However, the
motivation can emanate either from threat appraisal or from challenge appraisal, which
makes a difference. Worry levels are high in the former and low in the latter. Proactive
individuals are motivated to meet challenges and commit themselves to personal quality
standards. Self - regulatory goal management includes an ambitious manner of goal setting
and tenacious goal pursuit (Locke and Latham, 2002 , 2006 ; see Chapter 9 , this volume).
Goal pursuit requires “ action self - effi cacy, ” an optimistic belief that one is capable of ini-
tiating difficult courses of action. The role of beliefs in self - regulatory goal attainment
has been spelled out in more detail in the Health Action Process Approach (Lippke and
Ziegelmann, 2008 ; Reuter, Ziegelmann, Wiedemann, and Lippke, 2008 ; Schwarzer, 2008 ;
Schwarzer and Luszczynska, 2008 ).
The distinction between these four perspectives on coping is highly useful because it
shifts the focus from mere responses to negative events toward a broader range of risk and
goal management. The latter includes the active creation of opportunities and the positive
experience of challenge, in particular in the work domain. Aspinwall and Taylor ( 1997 )
have described a proactive coping theory that is similar, but not identical, to the present
one. Schwarzer and Taubert ( 2002 ) have made psychometric discriminations between pre-
ventive and proactive coping. The Proactive Coping Scale can be downloaded from the
web (Greenglass, Schwarzer, and Taubert, 1999 ).
WAYS OF COPING
Coping at the level of organizations: designing healthy workplaces
When an unexpected event happens, such as a strike or a company takeover, an organiz-
ation has to cope in a reactive manner. Reducing harm or compensating for loss is
required, and the way this is done depends largely on the particular nature of the stress
episode. When such events are imminent and certain, anticipatory coping is required. The
adequate way of coping is highly idiosyncratic. Preventive coping is called for when no
specific events are envisioned, but a more general threat in the distant future comes into
view. Such events could be the dangers of economic decline, potential mergers or down-
sizing, revised governmental employee health regulations, aging workforce, new tech-
nology, etc. When visions or challenges and a perceived potential for growth or mastery
prevail, proactive coping is initiated. The latter two perspectives entail about the same
set of innovations. In the literature, this is usually discussed as “ primary prevention ” or
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MANAGE STRESS AT WORK THROUGH PREVENTIVE AND PROACTIVE COPING 507
“ organizational prevention ” (Quick et al., 1997 ), which includes modifying work demands
and improving relationships at work.
Physical settings can be redesigned to minimize distressful effects of the physical work
environ ment, such as noise, heat, and crowding. The creation of pleasant and suitable offi ces
or workshops, enriched by cafeterias and fitness centers, can elevate job satisfaction, job safety,
and mental health, which indirectly may improve performance and loyalty. Job redesign is
aimed at changing task demands, for example by partitioning the workload, job rotation, job
enlargement, job enrichment, building teams, opening feedback channels, etc. (cf. Judge, this
volume). Flexible work schedules can help to enhance the employee ’s control and discretion and
allow for a better time management and integration of work and non - work demands (cf.
Balzer, this volume). Participative management and delegation expand the amount of autonomy at
work by disseminating information, decentralizing decision making, and involving subordi-
nates in a variety of work arrangements. When a boss promotes trust (see Chapter 21 , this
volume) with the employees, tension and confl ict are reduced, and awareness of partnership
may arise. The empowerment approach has a similar focus (see Chapter 11 , this volume).
Career development is another method of preventive or proactive coping to improve an esti-
mable portfolio of skills and talents. A set of career paths must be made transparent, and
various opportunities for promotion need to be created to motivate employees to set goals
for themselves and strive for these goals. This needs to be enriched by an effective feedback
and reward system. Self - assessment must be encouraged, and opportunities constantly need
to be analyzed (Lawler, 1994 ).
Organizational prevention is also directed at interpersonal demands placed on individ-
uals at the workplace (Quick et al., 1997 ). Role analysis is aimed at making a person’s role
within an organization transparent. Clarifying one ’s role profile in comparison to the pro-
files of others may help to reduce tension, misperceptions, and conflict. Roles are defi ned
as a set of expectations (by boss, peers, and subordinates) toward a particular position
holder. If roles are misperceived, “ role stress ” will emerge. Thus, role analysis and cor-
rection of perceptions constitute a way of preventive coping. Goal setting in itself can be
regarded as a method of preventive coping in order to avoid miscomprehension about
one ’s responsibilities and expected task performance (Locke, 2005 ). Negotiating proxi-
mal and distal work goals includes an agreement between supervisor and subordinate
or team about the conditions under which they should be attained and the criteria that
apply for their evaluation (Chapter 9 , this volume). Team building is a preventive coping
method that aims at the establishment of cohesive and effective work groups that per-
form at a higher level than isolated individuals, partly because they resolve interpersonal
conflicts and develop a cohesive spirit (Peterson, Park, and Sweeney, 2008 ). Social support
reflects broad - range prevention and intervention at all levels. The term denotes a cop-
ing resource as well as an interpersonal coping process, depending on the point in time
within a defined stress episode. Social support is generally seen as a buffer against the
impact of stress – although, empirically, main effects occur more frequently than statist-
ical interactions (Greenglass, Fiksenbaum, and Eaton, 2006 ; Schwarzer and Knoll, 2007 ).
As a buffer, social support can be part of reactive coping after the event has struck. As a
preventive and proactive coping strategy, social network building equals the institution of
a convoy that accompanies and protects the individual throughout the life course when
times get rough.
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508 T ABEA R EUTER AND R ALF SCHWARZER
Stress in organizations is related to their culture and leadership, organizational struc-
tures, and developments. Proactive leaders have transformed stressed corporations into
healthy ones, and restructuring has created relatively stress - free work environments, as has
been documented for Southwest Airlines, Chaparral Steel Company, Xerox Corporation,
Johnson and Johnson, or, as a negative example, Eastern Airlines (Quick et al., 1997 ).
CASE EXAMPLES
Preventive coping at the level of organizations: improving the
employability of an aging workforce
The following example demonstrates how an organization may cope with the demographic
changes of its workforce in a preventive as well as a proactive manner. The Deutsche
Bahn AG, Germany ’s national railway company, employs approximately 200,000 employ-
ees, of whom about 30% are 50 years and older. By 2015, this number is expected to
double to an estimated 60%. Whereas such a demographic change is often seen as a
threat to organizational functioning, the view and strategies taken by the company ’s
human resources department is more differentiated in that it counteracts risks and values
opportunities. The risks inherent in an aging work staff are faced by preventive coping
strategies and, at the same time, the opportunities seized with proactive measures. Risks
of the aging workforce include diminishing health and physical functioning as well as out-
dated qualifications. The human resources department set up an agenda for maintaining
the employability of their workforce. At the organizational level, this refers to the capabil-
ity to realize potential through sustainable employment. Such preventive coping strategies
include comprehensive health - promotion strategies, job rotation, job enlargement, job
enrichment, and technological advances to minimize physical strain.
The other side of the coin of an increasing percentage of older employees is to value
their judgments and competence, along with their sense of responsibility and ability to
gauge complex situations. These resources of older employees that are highly correlated
with professional experience are coined “ demographic return. ” Comprehending these
advantages can be viewed as proactive coping strategies that encompass age - mixed teams,
individual tandem solutions, and systematic job selection. In the face of rapidly changing
macroeconomic demands, preventive and proactive coping behavior at the organizational
level allows organizations to develop their potential for growth.
At the school level, teacher stress and burnout can be prevented and mitigated by mak-
ing them healthier workplaces. Based on his work in schools in Israel, Friedman ( 1999 )
suggests tackling the sources of stress by reducing the degree of polarization in the class-
room and the number of pupils per class and by changing teachers ’ work schedules. To
treat the symptoms of stress at the school level, he suggests creating a supportive atmos-
phere, open channels of communication, involving teachers in decision making, and
developing an open and positive organizational climate.
Coping at the individual level within organizations
At the individual level, Friedman ( 1999 ) suggests tackling the sources of stress by training
teachers to cope with stressful situations, instructing them about the causes of burnout,
c27.indd 509 6/17/09 3:19:59 PM
MANAGE STRESS AT WORK THROUGH PREVENTIVE AND PROACTIVE COPING 509
and developing and improving their abilities in problem solving, conflict resolution, and
leadership. To treat the symptoms of stress, he suggests in - service training, holidays, sup-
port and assistance groups, and workshops.
Some general theoretical comments on individual coping have to be added here,
based on the distinction between reactive, anticipatory, preventive, and proactive coping.
If a person fails to meet a work goal, is rejected by colleagues, has a conflict with the boss,
suffers from repetitive stress injury, or loses a contract or the job itself, reactive coping takes
place because the demands or events are appraised as ongoing or as prior harm or loss.
A range of mental and behavioral coping options are at the individual ’s disposal, depend-
ing on the available resources, preferences, and nature of the stress episode. Relaxation is
a commonplace recommendation to alleviate negative emotions or arousal, although it
does not contribute much to solve the underlying problem. Cognitive restructuring helps
to see the world with different eyes. Instrumental action may solve the problem at hand.
As noted earlier, the distinctions have been made between problem - focused and emotion -
focused coping (Lazarus, 1991 ). Social relations coping (Hobfoll, 1989 ) has been added
as a third dimension. Mobilizing support and talking with others are suggestions to cope
with adversity. The experience of harm or loss calls for compensatory efforts (mastery) or
search for meaning and flexible goal adjustment (Locke, 2002 ). There is no basic rule
or rank order of good and bad coping strategies that apply to harm or loss situations. The
individual adapts in an idiosyncratic manner to the situation and evaluates the coping
efforts retrospectively as having been more or less successful, which may not correspond
with the evaluation of onlookers. If someone fails to adapt, social support needs to be
mobilized from outside, and psychological counseling, therapy, traumatic event debriefi ng,
or even medical care may become necessary.
If someone faces a critical event in the near future, such as a public presentation, job
interview, medical procedure, or corporate decision about redundancy of jobs – in other
words, situations that are appraised as threatening – this stress episode requires anticipatory
coping. The range of coping options is the same as before. Increased effort to master the
situation is adaptive only if the situation is under personal control (interview, presenta-
tion), whereas situations under external control (medical procedure, corporate decision)
require mainly emotional and cognitive efforts (e.g. relaxation, reappraisal).
An individual who faces increasing work challenges or job volatility in the distant
future, such as downsizing, mergers, demotion, promotion, entrepreneurship, is better
off to choose either preventive coping strategies (in the case of threat appraisal) or proac-
tive coping strategies (in the case of challenge appraisal). The long - term accumulation of
general resistance resources includes behavioral, social, and cognitive strategies. Coping
with one ’s work demands, for example, comprises setting priorities, avoiding overload,
delegating tasks, acquiring social support, planning, and having good time management
(Quick et al., 1997 ), and, above all, always improving one ’s skills and developing new
ones. Managing one ’s lifestyle is directed at a healthy balance between work, family, and
leisure (Schaer, Bodenmann, and Klink, 2008 , and Chapter 31 ). Workaholics do not
maintain such a balance because they are trying to use work to alleviate self - doubt that is
not caused by work problems, and they hardly fi nd refuge anywhere. Work stress can spill
over into non - work settings, and vice versa, which places a particular burden on women
and dual - career couples (Greenglass, 2002 ). Protecting life domains from daily hassles
is an important aspect of self - regulation. Some companies grant their employees extra
time for revitalization and personal growth, for example by funding sabbaticals. Healthy
c27.indd 510 6/17/09 3:20:00 PM
510 T ABEA R EUTER AND R ALF SCHWARZER
nutrition and physical exercise are other lifestyle ingredients that bear a protective shield
against the experience of stress.
Stress management programs are usually not implemented by corporations as stand -
alone programs, but rather as part of more comprehensive health promotion strategies that
also aim at preventive nutrition, physical exercise, smoking cessation, preventing use of
alcohol and drugs, and others. IBM, Control Data Corporation, Illinois Bell, New York
Telephone Company, B. F. Goodrich Tire, Citicorp, Johnson and Johnson, and Dupont
are among the companies cited frequently that have established high - quality health -
promotion programs for their employees (see also Quick et al., 1997 ).
The cognitive way of coping includes stress reappraisal, internal dialog, constructive
self - talk, search for meaning, or optimistic explanatory style, among others. Individuals can
develop a more positive view of stressful situations, which may facilitate all kinds of coping.
Reinterpreting a threat into a challenge transforms preventive coping into proactive cop-
ing. The following case study, inspired by Covey ( 1989 ), demonstrates how proactive coping
behavior may enlarge an individual ’s range of control at the workplace.
Proactive coping at the individual level within organizations:
dealing with an authoritarian leader
The president of the organization in which Mr. X is employed is known for his authori-
tarian leadership style. Even though his executives view the president as being a dynamic
and talented person, they feel restricted and alienated by his style of management, which
consists of orders and creates an atmosphere of dictatorship. Unlike the other colleagues,
who cope with the situation by criticizing and complaining about the conditions, Mr. X
tries to compensate for the weak management by trying to enlarge his range of control.
When assigned to a task, he acts proactively by anticipating the president ’s needs. He
provides not only requested information on an issue, but also an analysis and recommen-
dations on how to deal with the issue. Eventually, he wins the president ’s trust. Instead
of receiving orders, he is asked for his opinion. This example illustrates how proactively
taking the initiative may not only increase one ’s decision latitude, but also how an obstacle
may be turned into a positive experience.
Proactive coping at the individual level within organizations: gain
control by developing hardiness
Habitual mindsets that reflect a constructive approach to life are inherent in the concepts
of perceived self - efficacy (Chapter 10 , this volume), learned optimism (Seligman, 1991 ),
and hardiness (Maddi, 1998 ). By improving such mindsets, employees can be empow-
ered to take charge of upcoming challenges in the workplace and to gain more control
over their lives. In other words, they develop resources as a prerequisite for preventive
and proactive coping. The hardiness concept has been applied frequently to prevent and
mitigate stress at work. It comprises the attitudes of commitment, control, and challenge.
The goal of interventions, for example, as those conducted by the Hardiness Institute, lies
in the promotion of these attitudes. Initially, participants respond to the HardiSurvey that
assesses these three components and allows one to gauge how much work stress a person
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MANAGE STRESS AT WORK THROUGH PREVENTIVE AND PROACTIVE COPING 511
experiences. Clients then undergo the 16 hour HardiTraining course, consisting of exer-
cises on how to cope with stress, relax, seek social support, eat right, and work out (Maddi,
Kahn, and Maddi, 1998 ). With a group of 54 managers, hardiness training was compared
to relaxation training and to a social support control condition. The first group reported
less strain and illness and higher job satisfaction. Thus, hardiness is seen as stimulating
effective functioning and protecting wellness under stressful conditions.
Proactive coping at the individual level within organizations:
learned optimism training
An example of a program at the individual level within organizations is “ learned optimism
training ” which was conducted at Metropolitan Life Insurance Company (Seligman, 1991 ;
Seligman and Schulman, 1986 ). Learned optimism is a proxy for a particular explanatory
style that can be acquired to improve one ’s interpretation of stressful events in general or
specifically at work. A diagnostic measure, the Attributional Style Questionnaire (ASQ),
was developed, which ranks individuals on an optimism/pessimism scale. One prediction
of this measure concerns job performance, for example successfully selling life insurance.
Insurance agents with high scores on the ASQ invest more effort and are more persist-
ent in “ cold calling ” of customers and attain better sales commissions than low scorers.
By using this diagnostic instrument to select personnel, Metropolitan Life has saved mil-
lions of dollars. Many companies now use such scales in order to identify applicants who
possess more than just drive and talent, namely, the optimism necessary for success as
well. Based on Seligman’s theory and his assessment procedure, a training program has
been developed to teach employees cognitive coping with stress. Participants with chronic
negative thoughts learn to talk to themselves in a constructive manner. If something goes
wrong, pessimists tend to have hopeless thoughts ( “ I always screw up, ” “ I ’ ll never get it
right ” ), that is, internal, stable, and global attributions of negative events. They learn to
transform these thoughts into external, variable, or specific attributions, such as “ Things
didn’t go well today, but I learned a lot from the experience. ” Workshop participants learn
to listen to their own internal dialog and to dispute their chronic negative thoughts and
come up with a more balanced view of themselves, the world, and the future. The four
day course is administered by Foresight, Inc., at Falls Church, Virginia. Unlike other
courses for sales agents, which teach what to say to clients, this course teaches what to say to
oneself when the client says no. Thus, it represents a cognitive coping training to reduce
stress when facing interpersonal demands. The most typical exercise is to identify adverse
events, the corresponding subjective belief, and the most likely subsequent emotions and
behaviors. Then, after recognizing one ’s explanatory style, the participants learn to dis-
pute their thoughts. They are asked to make the revised explanatory style a new habit to
supplant their usual automatic pessimistic explanations. In psychotherapy, this is known as
cognitive restructuring. This principle has turned out to be a powerful coping strategy that
facilitates job performance, job satisfaction, and health.
In sum, the examples have demonstrated the broad scope of coping in organizations
and have pointed to the direction in which interventions could go to facilitate more pre-
ventive and proactive coping. Coping is a set of mental and physical behaviors, whereas
perceived self - efficacy, hardiness, optimism, etc., are social - cognitive concepts that may
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512 T ABEA R EUTER AND R ALF SCHWARZER
provide the backdrop for improved coping. As such, they can be regarded as moderators
of the stress – coping relationship. Those who harbor high levels of resourceful mindsets
are better off when it comes to transforming a demanding situation. Emotional or impul-
sive ways of coping are not compatible with preventive and proactive coping because the
latter are based on reason (Locke, 2005 ).
CONCLUSION
Coping with stress is a normal and necessary experience in daily life. At the work-
place, it gains particular importance because it is related not only to individual
career goals, health, and satisfaction, but also to organizational success and social
relations. To understand coping, a number of analytical dimensions, perspectives,
theoretical models, and approaches have been suggested. In the present chapter, a
new distinction between reactive, anticipatory, preventive, and proactive coping has
been put forward because these coping perspectives have unique value for stress at
the workplace, including the positive side of stress. Interventions have to be tailored
to these perspectives. Events that are appraised as harm or loss require different cop-
ing interventions than those that are appraised as threats or challenges. The current
view connects coping theory with action theory and sets the stage for integrative
programs at the organizational and individual level. It is in line with the contempo-
rary trend toward a “ positive psychology ” (Peterson et al., 2008 ; Seligman, 2008 ).
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EXERCISES
Coping behaviors
In your classroom or work group, you may share each other ’s experience with proac-
tive coping behaviors, and, thus, provide and find role models for future situations.
In the following you find the proactive coping subscale of the Proactive Coping Inventory
(PCI) by Greenglass, Schwarzer, and Taubert (1999). The statements deal with reactions
you may have to vari ous situations. Indicate how true each of these statements is depend-
ing on how you feel about the situation. Do this by responding to one of the four state-
ments “ not at all true, ” “ barely true, ” “ somewhat true, ” or “ completely true. ”
1. “ I am a ‘ take charge ’ person. ”
2. “ I try to let things work out on their own. ” ( – )
3. “After attaining a goal, I look for another, more challenging one. ”
4. “ I like challenges and beating the odds. ”
5. “ I visualize my dreams and try to achieve them. ”
6. “ Despite numerous setbacks, I usually succeed in getting what I want. ”
7. “ I try to pinpoint what I need to succeed. ”
8. “ I always try to fi nd a way to work around obstacles; nothing really stops me. ”
9. “ I often see myself failing so I don’t get my hopes up too high. ” ( – )
10. “ When I apply for a position, I imagine myself fi lling it. ”
11. “ I turn obstacles into positive experiences. ”
12. “ If someone tells me I can’t do something, you can be sure I will do it. ”
13. “ When I experience a problem, I take the initiative in resolving it. ”
14. “ When I have a problem, I usually see myself in a no - win situation. ” ( – )
Complete the assignments and then, in small groups of four to fi ve individuals, com-
pare your own answers with those of your colleagues. Choose a statement on which you
responded “ completely true ” (statements marked with a ( – ) demand reverse coding) as a
positive example for proactive coping and one statement as a negative example ( “ not at
all ” or “ completely true ” for ( – ) statements) and share your experience by illustrating a
situation in which you responded in the way it is described in the statements.
Personal coping experiences
Identify a situation you encountered in the past where you behaved in a reactive manner
(e.g. reacting toward criticism, working on a project with a colleague who is permanently
late). Review the situation in the context of your range of control and potential alternate
pathways. How could you have responded? Take several moments and create the experi-
ence vividly in your mind. Share your experience with your classmates/colleagues and
discuss further ways of coping with challenging situations.
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28
Manage Confl ict through
Negotiation and Mediation
M. SUSAN TAY LOR AND ASHLEY FIELBIG
Managers ’ often find that their formal authority falls far short of
their responsibilities and their success is dependent on the actions
of others outside the chain of command. Though people in this
predicament may yearn for more control, there is often no practical
way to follow the textbook advice to match authority with responsi-
bility. “ Indirect management ” is the name we give this increasingly
important phenomenon of concentrated responsibility but shared
authority and resources. It calls for a very different approach from
traditional line management. (Lax and Sebenius, 1986 )
Managers function in an increasingly complex world where competition is intense and
global for virtually all product or service lines. Their revenue generating initiatives require
cross - unit cooperation and coordination. In addition, the structural parameters or pro-
cedural precedents that might assist in the implementation of revenue generating initiat-
ives are often absent or inconsistent. Furthermore, teams of employees who require and
demand substantial self - determination in order to perform their jobs effectively, increas-
ingly staff manager ’s work units. Factors such as scarce resources, ambiguous lines of
authority, conflicting goals, and high levels of interdependence generate a perfect set
of conditions for confl ict in the managerial job.
What exactly is meant by the term confl ict? Conflict is the process that occurs when
one party perceives that another has frustrated or is about to frustrate one or more of
its goals or “ interests ” as they are often referred to in the applied negotiations literature
(Fisher, Uri, and Patten, 1981; Thomas, 1976 ). In which aspects of a manager ’s job might
we expect conflict to emerge? Both research and experience show us that confl ict fre-
quently occurs across many aspects of managers’ jobs, for example in interactions with
their own managers, dealings with peers or associates, discussions with the employees they
manage, and in their need or desire to “ shore up ” their formal authority in the organiz-
ation. Therefore, managers face and must attempt to resolve conflict on virtually a daily
basis. Perhaps not surprising then, Fred Luthans and his colleagues have found that mana ging
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518 M. S USAN T AYLOR AND A SHLEY FIELBIG
conflict between employees ranked 5th on a list of 12 managerial activities found to be
most important to managerial effectiveness (Luthans et al., 1988).
This chapter focuses on the manager ’s role as conflict resolver. It is based on the meta -
principle that negotiation and mediation processes, when used appropriately, enhance
managers ’ effectiveness in resolving many of the conflicts that confront them at work.
Although written from a normative perspective that is based on research fi ndings, the
chapter also explores descriptive information concerning what is known about the ways
managers tend to deal with confl ict.
HOW MANAGERS ATTEMPT TO RESOLVE CONFLICTS
Past research has identified three ways in which conflicts or disputes may be resolved:
(1) interests, (2) rights, and (3) power (Ury, Brett, and Goldberg, 1988 ). First, parties may
seek to reconcile conflicts by finding solutions that will appeal to the most important
inte rests of most of those involved in the dispute. Ury et al. ’s second way to settle dis-
putes is focused on “ rights ” . In this method, managers determine whose “ rights ” they
want to satisfy, through the assessment of some independent standard. The standard
must be legitimate for all involved. Examples of such standards include contracts, or even
socia lly accepted norms such as reciprocity and precedence, or existing guidelines created
by the organization to resolve such disputes. The third approach towards confl ict resolu-
tion focuses on power. Parties may attempt to resolve conflicts according to who is more
powerful, or influential in the organization. Power can be defined as the ability to force
through ordering or suggesting the other party to do things he/she would not otherwise do.
Unfortunately, however, as Ury et al. ( 1988 ) observes, power differentials are generally
diffi cult to reconcile without a costly “ test of wills. ”
Fortunately, the work of Ury et al. ( 1988 ) also provides some assistance in assessing the
effectiveness of confl ict resolution methods.
THE RELATIVE EFFECTIVENESS OF RESOLUTION METHODS
One method of assessing the effectiveness of different conflict resolution methods is
to consider the “ costs of disputing. ” Costs of disputing include: (1) various transaction
expenses, including those that are economic, psychological, and time based; (2) parties ’
satisfaction with the fairness of the outcomes and of the resolution process in general; (3) the
effect of the resolution on the parties ’ relationship, particularly on their ability to work
together on a day - to - day basis; and finally (4) the likelihood of conflict recurrence, either
between the two parties or between one of them and another party. Once assessing method
effectiveness vis - à- vis these four criteria, Ury et al. ( 1988 , p. 15) concluded that: “ in
general reconciling interests is less costly than determining whose rights are more clearly
supported by the contract or precedent, which in turn is less costly than determining who
is more powerful, ” a process likely to result in the drawn - out battle of wills mentioned
earlier. However, rights and power may sometimes be used to enhance the effectiveness
of interest reconciliation by setting boundaries around what will be determined through
the reconciliation of interests. Thus, a sales manager might well use his or her legitimate
power (see Chapter 19 ) to establish monetary limits on the size of the account that sales
representatives involved in a dispute about account ownership might resolve through
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519 MANAGE CONFLICT THROUGH NEGOTIATION AND MEDIATION
negotiation or to develop a process determining the percentage of revenues that particular
divisions might lay claim to when revenues exceed 10 million. Overall, evidence seems to
support the relative effectiveness of reconciling parties ’ interests as an appropriate confl ict
resolution method for managers. This conclusion brings us to the topic of negotiation.
NEGOTIATION AS A MANAGERIAL TOOL
FOR
RECONCILING INTERESTS
Negotiation is a frequently applied technique for reconciling interests. It may be extremely
useful to managers when their perceived or actual interests are directly in confl ict with
interests of others in the workplace. Others include managers’ employees, their bosses,
and those outside their chain of command, for example the support staff charged with
the operations of various management systems in the organization, for example budget,
human resources, etc. As Lax and Sebenius ( 1986 , p. 2) have noted, “ Negotiation is a use-
ful skill for important occasions, but it also lies at the core of the manager ’s job. Managers ’
negotiate not only to win contracts but also to guide enterprises in the face of change. ”
Negotiation is defined as “ the situation where parties, with some apparent confl ict,
seek to do better through jointly decided action than they could do otherwise ” (Lax and
Sebenius, 1986 , p. 12). There are essentially two types of negotiation: (1) distributive or
win/lose and (2) collaborative or win/win. The body of research on the nature and effects
of negotiation is quite substantial. Because collaborative negotiation is best used in situ-
ations: (1) where a long - term, rather than a short - term relationship exists, or is envisioned
between parties; (2) when those involved share important values or principles that shape
their goals in the negotiation; and (3) where there are a number of different issues at stake,
such that the likelihood of creating a situation of joint gain is higher, we strongly argue
that this type of negotiation is better than distributive in resolving the kinds of confl ict in
which managers are frequently involved. Thus, in this chapter, we provide a number of
principles about the nature of collaborative negotiation and also generate several recom-
mendations for enhancing managers ’ negotiation effectiveness.
Negotiation principles and recommendations
Which negotiating styles of behavior tend to enable managers to “ do better through joint
action? ” Work by Fisher, Ury, and Patten (Fisher, Ury, and Patten, 1991) at the Harvard
Negotiation School have found that higher joint gains frequently result from collaborative
negotiation focused on achieving the interests of both parties. Principles of collaborative
negotiation include:
1. Parties ’ should engage in a candid and open exchange of information about both
their interests.
2. Each party should intend to satisfy the other ’ s interests to some degree such that
the focal party ’s (the manager ’s) interests are satisfied to the greatest extent and the
other party ’s interests are satisfi ed at least to an acceptable degree.
3. Both parties should be creative in identifying many possible options that might satisfy
the other party ’ s interests.
4. Parties should rely on external standards, facts, or criteria to resolve disputes over the
value of various options (e.g. the use of the Blue Book to determine used car values).
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520 M. S USAN T AYLOR AND A SHLEY FIELBIG
5. Partie s should identify and try to enhance a “ BATNA, ” the best alternative to a
negotiated solution, in order to enhance their ability to “ do better through nego-
tiating, ” than through other methods, because they will not be forced to accept an
undesirable offer simply to reach agreement. Thus the key idea of a BATNA is to
have a very strong alternative that you can move to if your existing partner does not
meet your important interests or goals. During negotiation, parties should communi-
cate with one another in ways that enhance their relationship by focusing on resolv-
ing the issues, rather than singling out one another for disdain and contempt (see
also Chapter 18 ), and working hard to improve their relationship so that negotiation
is easier for subsequent conflicts; at the very least, the communication used in nego-
tiation should not worsen the relationship.
Recommendations for negotiating collaboratively
1. Take stock of your own interests to make sure you understand and can prioritize
them. What is it you want out of this negotiation? Prioritize your interests so you
will be ready to make some tradeoffs if necessary. Set higher goals for what you
would like to walk away with – research shows they tend to yield higher gains.
2. Begin the bargaining with a positive overture, perhaps by making a small concession –
then reciprocate the other party ’s concessions but not at the cost of abandoning
your own.
3. Look beneath the other party ’s behavioral tactics (bluffing, silence) and try to deter-
mine his or her strategy. Even threats and power plays can be intended to guide you
toward a mutually acceptable agreement. Be sensitive to this and follow it if it is
benefi cial to your interests.
4. Do not allow accountability to your constituents (e.g. your manager or your employ-
ees) or surveillance by them to spawn highly aggressive competitive bargaining; it
often spirals quickly out of control, making joint gains impossible.
5. If you have power (whether greater expertise, legitimate, referent, etc.), in a nego-
tiation, use it – with specific demands, mild threats, and persuasion – to guide the
other party toward an agreement (see also Chapter 19 ).
6. Be open to accepting third party assistance to reach agreement (more on this
below).
7. Attend to the negotiation environment. Be aware that your behavior and power as
well as that of the other party are altered by it. Opponents who come from environ-
ments of scarce resources are often rewarded for highly competitive and aggres-
sive bargaining. Anticipate this and strive to protect your interests (Wall and Blum,
1991 ).
8. Negotiation tends to be more efficient (faster, more likely to reach agreement) and
more likely to yield agreements in the interests of both parties (collaborative nego-
tiations) when they have positive working relationships. Thus, strive to develop a
positive working relationship with your negotiation partner. Design situations in
which you both depend on one another for help across a number of issues and
opportunities for action. When working relationships are already strained, suggest
problem - solving workshops to improve them before beginning the negotiations.
9. Teams of negotiators often respond more competitively than do individuals. Be alert
to the possibility that when teams are involved, contentious behavior is more likely to
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521 MANAGE CONFLICT THROUGH NEGOTIATION AND MEDIATION
spiral and escalate the conflict. Also internal conflict within a team will lower the
likelihood of reaching agreement between the two parties. Strive to minimize within
team conflict before between - group negotiations start (Chapter 18 ). Try to align the
thinking on your own team before starting. Note that you may have to use coercive
power to obtain compliance from members who are less attached to the group,
while conciliation techniques – explanation, reciprocal favors, concessions – often work
for members with a greater sense of group commitment (see again Chapter 19 ).
10. Compared to face - to - face negotiations, e - negotiations (computer mediated) generate:
(a) more multi - issue offers, (b) less rapport in the relationship, (c) mixed fi ndings on
the creation of joint gain, meaning some studies show better results with face - to - face
negotiations and some show no difference between face - to - face and e - negotiations,
and (d) more equal gains for both parties. However, by enhancing e - negotiations with
schmoozing, such as brief personal disclosure and short telephone calls prior to nego-
tiations, negotiators are able to decrease the use of aggressive strategies that reduce
their outcomes. In addition, schmoozing tends to: (a) increase cooperation, trust,
and relationship quality; (b) improve joint outcomes; and (c) reduce the likelihood of
impasse (Thompson and Nadler, 2002 ).
THIRD PARTY ROLES: THE MANAGER AS MEDIATOR
Not only do managers have to resolve confl icts where they are directly involved as a partici-
pating party, but they often have to resolve it when they are indirectly involved and affected,
for example the case where two employees from the manager ’s work group are engaged
in a dispute. How do managers respond in these situations? Research by Sheppard ( 1984 )
indicates that they choose one of four third party modes of conflict resolution based on
four criteria: (1) efficiency: whether the action taken will resolve the conflict with a mini-
mal amount of resources, for example their time, employees ’ time, expense, etc.; (2) effec-
tiveness: whether the action will insure the conflict is solved well and remains solved (see
Chapter 23 ) – for example, using a mode of resolution that involves listening to all parties ’
views, and then brainstorming an appropriate solution minimizes the re- emergence of the
conflict; (3) participant satisfaction: whether the action will insure that parties are satisfi ed
with the outcome – one way joint satisfaction is achieved is by letting both parties present
their views and then inventing a solution that satisfies both of them; (4) fairness: whether
the action will solve the dispute in a way that the parties believe is fair according to some
external standard. Research has shown that when choosing which actions to take, mana gers
typically weight efficiency and effectiveness higher than the other criteria. Furthermore,
research shows emphasizing efficiency and effectiveness encourages managers to attempt
to take control of the conflict situation, a situation we examine below that suboptimizes
potential outcomes to the parties themselves and their organization.
Sheppard ( 1984 ) proposed a four - fold classification system for the modes in which third
parties, such as managers, may intervene in conflicts. His system is based on high and low
levels of procedural and outcome control by the third party (the manager in our case) and is
supported by at least two studies. The classification system and study results are shown below:
1. Inquisitorial Intervention (High process control/high outcome control) – in
this mode, managers actively control the discussion between parties, frequently
directing what is said, and they control the outcome by inventing and enforcing a
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522 M. S USAN T AYLOR AND A SHLEY FIELBIG
solution that they believe will meet both parties ’ needs, much like an inquisitor or
benevolent parent. Sheppard and his colleagues (Sheppard, 1984; Lewicki and
Sheppard, 1985) found that the managers tend to use this method of intervention
most frequently.
2. Adversarial Intervention/Judge (Low process control/high outcome control) –
in this mode, a manager decides how the conflict will be resolved and enforces the
resolution if needed. However, the manager does not try to actively control the pro-
cess. Rather he or she allows the parties to determine how they wish to present
information about the conflict, listens to the information presented and then makes
a decision. This style was the second most frequent used by managers.
3. Avoiders, Delegators, Impetus Providers/Motivating (Low process control,
low outcome control) – for this mode, a manager may totally ignore the confl ict,
dele gate it to others such as human resources or lower level managers to resolve
or try to motivate the parties themselves to resolve it by asking, “ What is going on
here? ” and then signaling the parties that strong punishment will be forthcoming if
they don’t solve their own dispute. This was the third most common mode of third
party intervention.
4. Mediation (High process control/low outcome control – in this mode a manager
controls the process through which parties reveal information about their confl ict
but does not attempt to control the decision concerning how the conflict will be
resolved. Mediation was virtually unused by the mangers studied.
What then are the effects of these different interventions?
EFFECTS OF DIFFERENT INTERVENTION MODES
Research on the effects of mode usage indicates that a greater reliance on the mediator
mode of confl ict resolution is likely to enhance managers ’ effectiveness the most in resolving
third party confl icts. Managers ’ use of a particular mode has important implications, not
only for the content of the resolution obtained, but also for the disputing parties ’ percep-
tions of the fairness of the outcome and the procedure used.
The bottom line is that those managers who use the mediator mode tended to pro-
duce compromise outcomes that incorporate at least some of each party ’s interests, while
those who used other modes, for example questioning parties, opposing their perspectives
of the conflict, threatening to resolve it unilaterally if they did not, etc., tended to pro-
duce outcomes favoring one of the conflicting parties over the other (Karambayya and
Brett, 1989 ). Not surprisingly, employees were more satisfied when their interests were
either favored in the outcome, or when they experienced a compromise outcome. Further,
those who experienced the mediator mode of third party resolution tended to perceive
that the confl ict outcome, resolution process, and mediator were fairer than did those who
experienced the other three modes of inquisitor, judge, or the combined avoiding/delegat-
ing/providing impetus mode. Parties ’ fairness perceptions are important (see Chapters 14
and 21 ) because they have been shown to impact the effectiveness of confl ict resolution,
that is, to strengthen the relationship between parties, and aid in preventing a recurrence
c28.indd 523 6/17/09 3:21:12 PM
523 MANAGE CONFLICT THROUGH NEGOTIATION AND MEDIATION
of the conflict (Karambayya, Brett, and Lytle, 1992 ). Therefore, even though managers
show a tendency to resolve conflict in ways that allow them greater control over the out-
come implemented, such as inquisitor or judge, these are not the best approaches. Instead,
using these modes increases the risk that managers will produce solutions that undermine
the relationship between parties. This tends to erode the conflict resolution and to pre-
vent the parties themselves from working together effectively to resolve their own confl icts
in the future.
WHY MANAGERS FAIL TO USE THE MEDIATION MODE
Why do managers use modes of conflict resolution other than mediation, even though, as
discussed above, they tend to be suboptimal. Modes that provide managers with greater
control over the outcome of the conflict, such as inquisitor and judge, are more likely to
be used in cases where time pressures for settlement are severe and the settlement will
have broad implications for the resolution of other disputes in the work unit or organi-
zation. Other factors increasing managers ’ tendency to take greater control of outcome
of the dispute include: whether the manager will have to interact with disputing parties
again in the future (if yes, the manager will assume greater control); whether the manager
possesses formal authority over the conflicting parties (i.e. their own employees rather than
peers – if yes, the manager will assume greater control); and the amount of experience a
manager has supervising employees – less experienced managers assume greater control
(Lewicki and Sheppard, 1985 ; Karambayya et al., 1992 ).
Two other overarching explanations for managers ’ tendency to suboptimize confl ict
resolution in cases where they are the third party only indirectly involved are, fi rst, that
they tend to attribute the cause of the conflict to parties ’ personality dysfunctions, rather
than to differing goals or interests, and then assume it is their job to intervene in confl icts
quickly and directly. These factors are likely to discourage the manager ’s use of a mediating
style for conflict resolution (Kolb, 1986 ; Kolb and Sheppard, 1985 ). Finally, managers are
unlikely to rely on mediation to resolve third party conflict because they lack the basic
behavioral skills to do so. Thus, we discuss the types of mediation behaviors that mana-
gers may use and which works best, when.
TYPES OF MEDIATION BEHAVIOR
Research has confirmed three types of mediator behavior – diagnostic (formerly called
reflexive by the researchers, Kressel and Pruitt, 1985 ), contextual, and substantive inter-
ventions. However, it is important to note prior to discussing these that employees ’ reactions
to managers ’ attempts to mediate conflicts at work tend to be more positive when the
disputing individuals are allowed some time to resolve the conflict on their own, without
mediation. Quick intervention in a conflict between employees by a manager attempt-
ing to mediate is likely to violate the employees ’ sense of due process, their perceptions
of fairness, and, subsequently, the longevity and effectiveness of any agreement reached
(Conlon and Fasolo, 1990 ).
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524 M. S USAN T AYLOR AND A SHLEY FIELBIG
That being said, the following types of mediation interventions are applicable at
different points in the mediation episode; thus a mediator might use all of them in a single
mediation or simply one or two, based on his or her judgment that the parties require
more or less assistance in resolving their own dispute. We begin with “ Diagnostic ” medi-
ation interventions as they tend to be used fi rst in a mediation episode.
Diagnostic interventions occur early in the mediation process and involve the manager ’s
attempt to become familiar with the conflict between the parties, bond with them, and
establish ground rules for parties ’ behavior that will prevent the conflict from escalat-
ing until the manager understands it better. The manager then attempts to diagnose
the nature of the conflict and the types of tactics that are likely to result in agreement.
Although it is commonly accepted that mediators must be neutral and disinterested in the
conflicts of the parties they assist, mediator neutrality does not appear to be as important
as previously believed. Many times mediators are chosen because of their relationship
with one party (e.g. labor mediation). Thus, they are able to influence the confl ict because
they have an interest in the way it is resolved.
Contextual interventions consist of managers ’ attempts to impact the process through
which the two parties interact with one another to discuss, negotiate, and resolve their
conflict. It does not address the content of the conflict resolution but instead focuses on
issues such as climate, structure, conflict within each party ’s team, etc. At the most basic
level, contextual interventions are intended to encourage parties to persist in their efforts
to resolve the conflict, help them to engage in problem solving and get them to the point
of developing their own solution. Thus, this type of intervention may address issues of
poor communication, facilitate effective discussion sessions that diffuse anger and keep
parties focused on the problem that faces them, and perhaps even establish joint fact fi nd-
ing so that both parties will accept the results.
Substantive interventions concern how the mediator deals directly with the issues in confl ict
between the parties. These behaviors tend to occur later during the mediation process and
include the exploration of potential compromises, the suggestion of possible agreements,
and assistance in evaluating the pros and cons of various proposals.
In general, research (Lim and Carnevale, 1990 ) indicates that all three types of inter-
vention are effective with one exception. At very high levels of conflict, only the diagnostic
intervention remains effective, probably because it helps build trust between the mediator
and parties and provides both with a better understanding of the nature of the confl ict.
However, at very high levels of conflict, both contextual and substantive interventions
tend to decrease parties ’ likelihood of reaching agreement, probably because the parties
view them as attempts to undermine their key interests.
In addition, there are active versus passive approaches that underlie the three inter-
ventions discussed above (Lim and Carnevale, 1990 ). These approaches refer to the
mediators ’ level of assertiveness or forcefulness in enacting any of the three types of inter-
ventions. Mediators often exert considerable pressure on the parties to agree to specifi c
proposals, particularly in cases where the mediator ’s own interests or values are involved,
he or she feels pressure to avoid the high costs of litigation, or very high levels of tension
or hostility exist between parties. In general, research indicates that an assertive mediator
approach is positively associated with the incidence of settlement rather than a stalemate.
Thus, mediators should tend to use all three interventions in an assertive, rather than
passive manner.
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525MANAGE CONFLICT THROUGH NEGOTIATION AND MEDIATION
SUMMARY: THIRD PARTY CONFLICT RESOLUTION AND MEDIATION
P
RINCIPLES AND RECOMMENDATIONS
Below is a summary of several principles from managers ’ use of third party conflict
resolution modes at work:
1. When managers choose to mediate the dispute between parties at work, employees
or peers, many favorable results occur from the mediator approach. They include
high, shared perceptions of fairness in the process, an acceptance of a proposed
settlement, and a settlement that reflects the interests of both parties. In addition,
parties ’ fairness perceptions positively affect the nature of their relationship with the
mediator, and decrease the likelihood that confl ict will recur.
2. Nevertheless, managers show strong tendencies to question parties about the causes
of the conflict, to challenge their approaches to resolving it, and to unilaterally
decide the dispute if parties can’t resolve it themselves – all behaviors that deliver
poorer results than does well - implemented mediation.
3. Managers ’ tendencies to unilaterally solve disputes between employees increase
when time is scarce, the conflict has implications for the rest of their unit or for the
organization, and disputing parties will not have to work together in the future.
Thus, we recommend that managers interested in pursuing a mediation mode of confl ict
resolution should act assertively and use:
1. Diagnostic interventions that increase each party ’s trust of the manager ’s fairness,
also increase the likelihood of the manager ’s identifying the underlying causes of
the confl ict, and his or her display of behaviors most likely to result in settlement.
2. Contextual interventions that facilitate communication between parties, help to
diffuse anger and other intense emotions, assist in identifying the most important
issues of dispute, provide for the systematic discussion of issues and incremental
agreement, and develop a joint, unbiased process for locating information needed
to resolve the confl ict.
3. Substantive interventions that propose solutions to the conflict that may have
escaped the attention of the parties while also assuring them that the choice of solu-
tions will be left up to them.
4. Contextual and substantive interventions to first address the within - group confl ict
when it is internal to the organization within groups of employees.
EXCEPTIONS TO THE RECOMMENDATIONS
There are notable exceptions to the recommendations provided within this chapter for
enhancing the effectiveness of managers ’ negotiation and mediation skills. For nego-
tiations, the recommendations are limited to parties who rationally seek out solutions that
will enhance and maintain their own interests. When conflicting parties act irrationally
by showing little concern for important interests, earlier recommendations provided in
the negotiation section of this chapter are unlikely to prove effective. Irrational behavior
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526 M. S USAN T AYLOR AND A SHLEY FIELBIG
could be inspired by intense anger or latent hostility, drug or alcohol abuse, psychosis, or
constraints placed on the party by their constituents. An example of negotiating with an
irrational party is provided in the case illustration below and the sequel that follows. In a
similar vein, when negotiators hold different principles about what constitutes fairness in
negotiation procedures and outcomes, prior negotiation recommendations made in this
chapter are unlikely to result in agreements. Such differences may result from past negoti-
ation experiences that were quite distributive, i.e. win – lose of differences in equity sensitivity.
In any event, when differences in definitions of fairness vary between parties, they often
become hostile and rigid, and are unwilling to concede any option that is acceptable to the
other; thus no agreement is reached and a stalemate generally occurs as well as a decrease
in the quality of the relationship (Pruitt, Pierce, Zubeck, McGillicuddy, and Welton, 1991 ).
In the case of the manager as mediator, it is important to realize that most types of
mediation behavior tend to be more effective under moderate levels of confl ict, rather
than extremely high or low levels. At very high or very low levels of conflict, the prob-
ability that either contextual or substantive mediation interventions will lead to an agree-
ment diminishes rapidly (Kressel and Pruitt, 1985 ). Similarly, very low levels of confl ict
also tend to weaken the positive settlement effects of mediation interventions. Mediation
is likely to result in cooperation and agreement by the involved parties only when they are
motivated by sufficiently high levels of conflict to bargain and resolve their confl ict (Wall
and Blum, 1990). Finally, employees are likely to react more positively to managers ’ medi-
ation attempts when they are first allowed some time to resolve the conflict on their own.
Quick intervention by a manager attempting mediation is likely to violate the employees’
sense of due process and their perceptions of fairness. Subsequently, it is also likely to
affect the longevity and effectiveness of any agreement reached (Conlon and Fasolo,
1990 ). Having examined some possible exceptions or boundary conditions to mediation
we further illustrate the application of the concepts through the use of a case study and its
sequel several years later.
CASE EXAMPLES
Negotiating with irrational folks: the case of Jay Leno ’s agent
An excellent illustration of what happens when rational managers attempt to nego tiate
conflicts with irrational parties is provided in the book The Late Show. The Late Show
discusses the David Letterman and Jay Leno battle for late night TV. According to the
author, Bill Carter ( 1994 ), this negotiation was highly influenced by the persona of Leno ’s
long - time agent, Helen Kushnick. It was Helen who helped Jay, not initially liked or
favored by NBC Tonight Show host Johnny Carson, attain an edge over Carson’s preferred
choice, David Letterman. Realizing that NBC affiliate stations would have considerable
influence in any decision about a new host for the Tonight Show, Kushnick convinced Jay
to conduct several cross - country tours where he appeared live on many NBC affi liates
and devoted considerable time to building rapport with their owners and managers. The
support of the NBC affiliates, as well NBC executives ’ belief that Jay ’s personality and
style of comedy were better suited to a long - term run on NBC ’s Tonight Show than were
David Letterman’s, ultimately clinched the deal for him. On May 16, 1991, Leno signed
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527 MANAGE CONFLICT THROUGH NEGOTIATION AND MEDIATION
a lucrative agreement making him host of the Tonight Show on the departure of Johnny
Carson. This contract also named Helen Kushnick as the executive producer on the show.
An understanding of the negotiations that unfold below requires some background on
Helen Kushnick ’s negotiation style, personality, and relationship with Jay Leno. Helen’s
style was one of extreme contending. She had experienced much sadness during her adult
life including the death of one of her twins. Her only son died while still an infant as
the result of an AIDs infected blood transfusion. In 1989, shortly after her son’s death,
her husband died from colon cancer. Furthermore, Helen was ill with breast cancer and
was undergoing chemotherapy at the time of the negotiations. On his deathbed, Jerry
Kushnick, Helen’s husband, asked Jay Leno to take care of his wife and his 11 - year- old
daughter. Jay consented and then publicly repeated his promise at the funeral. According
to her close associates, Helen’s style never faltered in the face of these overwhelming
obstacles, it just became more intense. Carter noted, “ She didn’t become beaten or bowed;
she just became more determined, more driven, more ferociously focused than ever
before ” (Carter, 1994 , p. 171). Angered by Johnny Carson’s rejection of Jay, Helen secretly
started a rumor that NBC was going to drop Carson for Jay. This rumor caused incredible
tension between the network and Carson for a period of time before his retirement.
Once Jay Leno took over as Tonight Show host in 1991, NBC executives were surprised
to find that he appeared stiff and uncomfortable in the host slot. He was without the
spontaneity and humor that had consistently characterized his guest spots. Many attributed
this change in style to Helen’s influence on the show as executive producer. Angered by
Carson’s rejection of Jay and his refusal to invite Jay to appear on any of the fi nal shows
before his retirement, Helen repeatedly rejected NBC executives ’ request that Jay make
a complimentary statement about Carson and his career on Jay ’s first show. The absence
of such a statement was conspicuously noted in all the press given to Jay ’s opening and a
source of embarrassment to him and to NBC. Helen went on to attempt to choreograph
Jay ’s movements on the set, making them appear stiff, formal, and affected. She placed
the blue - collar comic in expensive designer suits, and erupted in a tirade of name - calling
and endless criticism of anyone who tried to question these changes. Soon her attacks
extended to Jay himself; she publicly and privately belittled him and attacked his comedy
and his intelligence. Jay never responded to the attacks or even appeared embarrassed
by them. However, many on the Tonight Show felt that the effects of Helen’s attacks were
apparent in Jay ’s shaky appearance on the set, particularly during the opening monolog.
Further, Helen undertook a bloodletting campaign to protect Jay from the competition
by blacklisting the signing of any guests who appeared on Arsenio Hall ’s show. Disliking
Jerry Seinfeld, one of Jay ’s closest friends, she denied Seinfeld ’s request to use the Tonight
Show set. She further denied the scheduling of a surprise guest appearance by Jay on
Seinfeld ’s own show. She even blacklisted Seinfeld himself, the host of one of NBC ’s most
popular shows, from the Tonight Show until NBC executive Warren Littlefi eld personally
intervened.
Time and time again during this period, Helen ignored the pleas of NBC executives
to tone down her “ Winner Take All ” approach. Her approach was belittling the network ’s
image and its long - term relationships with distinguished guests. However, Helen refused,
and actually intensified her destructive activities. She was confident that her hold on Leno
would prevent NBC from ever firing her. She believed if she was fired Jay would leave the
show as well. At first she was right. Ignoring NBC ’s multiple requests that Helen be fi red,
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528 M. S USAN T AYLOR AND A SHLEY FIELBIG
Jay instead asked the network to write out a list of what was acceptable for Helen to do
and not do. Shortly afterward in the middle of a meeting, the executives and Jay watched
as Helen’s form morphed from cool, controlled, and rational into a lotus form accom-
panied with screaming and rocking. Warren Littlefield, the President of NBC, then told
Leno that she was totally out of control and had to go. Still, Jay was reluctant to cut the
17 - year bond between them. Leno refused to assure Littlefield that he would show up for
work if Helen were fired. Finally, Jay learned that Helen had started the rumor that NBC
would replace Carson with Leno. This was a rumor he had personally denied starting,
even when speaking to Johnny Carson himself. His support for Helen began to crumble.
He signaled Littlefi eld that he would do the show, with or without Kushnick.
On Monday morning when Helen arrived for work, the network handed her a letter
of dismissal. Still, Jay refused to support the action, issuing press releases that he sup-
ported Ms. Kushnick. He hoped to duck the conflict until after that day ’s show was taped,
but Helen confronted him in his dressing room. She was raging and screaming so loud
that she could be heard throughout the set. When these tactics failed to work, she came at
Leno with emotion, arguing that he had to quit the Tonight Show for Sarah, her daughter ’ s
sake. At this point, even Jay had had enough. He broke a glass cover on his desk to stop
the tirade, refused to quit, and went on to display a dazzling performance on that night ’s
show. Helen stormed off the studio lot shortly after the filming began, leaving Jay ’s direc-
tion in the hands of others. As soon as she left, NBC barred her from the set, posting little
photos of her at all the studio gates.
Helen Kushnick ’s behavior provides a perfect illustration of the way in which irrational
negotiators use threats and intimidation to obtain their own way and ignore even courte-
ous entreaties from the other party to maintain a long and valued relationship. Clearly
unable to see the impact of her behavior on the interests the network held supreme, Helen
simply grew more and more confident that she could do whatever she pleased. She
believed because she held power over Jay Leno, the network star, she could do whatever
she wanted regardless of no matter how negatively it impacted her long - term interests
or those of the network. Time and time again, she chose to satisfy short - term emotional
needs, rather than preserve the long - term interests and relationship at stake. As shown
here, neither collaborative win – win nor contending win – lose approaches tend to work
with irrational negotiators. Instead, a party caught up in this kind of exchange is gener-
ally better off to find a strong BATNA (meaning the “ Best Alternative to a Negotiated
Agreement, ” see Negotiation Principles), or satisfying alternative, and exit the relationship
without agreement.
Sequel: Jay Leno ’s own upcoming departure from NBC
Fast - forward 16 years after Jay Leno ’s succession to Johnny Carson in 1992. We find an
incredibly successful comedian whose own upcoming succession by Conan O ’ Brien in
2009 appears right on target. Jay exemplifies the same workaholic he has been through-
out his reign. However, he apparently learned a great deal from his own gut - wrenching
ascension to the primer NBC Tonight talk show host at the expense of David Letterman,
who subsequently went to CBS where his current contract expires in 2010. In 2001,
however, when Jay ’ s late night coworker, Conan O ’ Brien, expressed his desire to work at
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529 MANAGE CONFLICT THROUGH NEGOTIATION AND MEDIATION
an earlier hour, Jay was at one of the many highpoints in his ratings and career. What
might have evolved into another fistfight negotiation that took no prisoners at NBC
instead was easily averted with a deal that focused on the needs and interests of both
parties. Jay got a contract for another five years after promising to step down in time to
make way for Conan in 2009. While Conan, despite his eagerness, agreed to sit tight in
his late night position for another half decade in exchange for a guaranteed two - year
stint at the prime NBC Tonight Show spot. By all accounts, this friendly, collaborative
agreement was largely due to the graciousness and hard - earned negotiation insights of
Jay himself. He was heard to remark that during his earlier battle with Letterman for
the Tonight slot, “ A lot of good friendships were permanently damaged. ” “ Quite frankly,
I don’t want to see anybody go through that again ” (Sheppard, 2004 ). In fact Jay termed
the new deal “ the world ’s easiest negotiation ” and followed with “ I like what I do. They
were very gene rous. ” In fact, Leno neither sought nor received an ownership stake in
the show, even though Letterman and Carson have/had partial ownership. Instead, he
cited his loyalty to Jack Welch, then CEO of General Electric, parent company to NBC,
commenting, “ I ’ m a handshake guy. I work for Jack. He was loyal to me, and I am to
him ” (Carter, 2001 ).
As the transition date, expected to be May 2009, approaches, Jay Leno at 58 is at the
top of his game. He ’s the reigning champion of late night television and continues to
report that he is leaving NBC as promised. However, Leno has given no indication that he
will do anything but continue to be a comedian, stating, “ What I do is tell jokes at 11:30 at
night. ” Meanwhile senior executives at ABC, Fox, and Sony Studios have begun to circle
Leno, making discrete, but highly lucrative, bids that will allow Leno to do what he does
and enjoys best. His attorney, Kenneth Ziffren, states, “ Jay, will of course, honor his con-
tract obligations to NBC. ” “ Jay isn’t talking to anyone about anything and won’t be until
it ’ s contractually proper ” (Carter, 2008 ).
Jay Leno remains one classy, incredibly talented comedian who learned the pitfalls of
irrational negotiations the hard way from his bulldozer agent Helen Kusnick. As a result
he is now an expert negotiator in his own right. We can certainly expect that his next deal
will be a very profi table one, yet one also centered on his primary interest, “ telling jokes at
11:30 at night. ”
REFERENCES
Carter , B. ( 1994 ). The Late Shift. NY : Hyperion Press .
Carter , B. ( 2001 ). Leno signs for 5 year of ‘ Tonight ’ . New York Times, January 11.
Carter , B. ( 2008 ). Suiters are set to say to Leno, long live the king . New York Times , February
27, Late Edition.
Conlon , D. E. , and Fasolo , P. M. ( 1990 ). Influence of speed of third - party intervention and
outcome on negotiator and constituencies fairness judgments. Academy of Management
Journal, 33 , 833–846 .
Fisher, R., Ury , W. , and Patten , B. ( 1991 ). Getting to Yes. NY : Penguin Books.
Karambayya , R., and Brett , J. M. ( 1989 ). Managers handling disputes . Academy of
Management Journal, 32 , 6897–6704 .
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Karambayya , R., Brett , J. M. , and Lytle, A. ( 1992 ). Effects of formal authority and experi-
ence on third party roles, outcomes and perceptions of fairness. Academy of Management
Journal, 35 , 426–438 .
Kolb , D. ( 1986 ). Who are organizational third parties and what do they do? In
Bazerman , M. A. , Lewicki , R. A. , and Sheppard , B. H. (eds), Research on Negotiations in
Organizations, vol 1 , JAI : Greenwich CT , 207–228 .
Kolb , D. , and Sheppard , B. ( 1985 ). Do managers mediate or even arbitrate? Negotiation
Journal, 1 , 379–388 .
Kressel , K., and Pruitt , D. G. ( 1985 ). Themes in the mediation of social confl ict . Journal of
Social Issues, 41 , 179–198 .
Lax , D. A. , and Sebenius , J. K. ( 1986 ). The Manager as Negotiator. NY : Free Press .
Lewicki , R. J., and Sheppard , B. H. ( 1985 ). Choosing how to intervene . Journal of
Occupational Behavior, 6 , 49–64 .
Lim , R. G. , and Carnevale , P.J. ( 1990 ). Contingencies in the mediation of disputes . Journal
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Luthans, F., Hodgetts, R., and Rosenkrantz, L. (1988). Real Managers. New York: Harper Row.
Pruitt , D. G., Pierce , R. S., Zubeck , J. M. , McGillicuddy , N. B., Welton , G. L. ( 1991 ).
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EXERCISES
Negotiating an apartment rental in a college town: an exercise stressing the
principles of and recommendations for collaborative negotiation
Introduction. This scenario asks you to adopt a collaborative negotiation style and start
to work negotiating your first off - campus apartment. To simplify things for first - time role
players, the negotiation involves one main issue – the price of renting/leasing an apart-
ment. The negotiation has two roles: (a) the owner landlord and (b) the student who is
a potential renter. You will be negotiating the cost of monthly rent as well as terms of
benefits/services for the lease. There is additional information you can use to leverage
your negotiation and obtain the best deal for your role. However, it is important that you
use your confidential role information to determine how attractive various offers made by
your partner are to you.
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531 MANAGE CONFLICT THROUGH NEGOTIATION AND MEDIATION
Background information. You are negotiating the terms of a lease for an unfurnished, one
bedroom, and one bathroom apartment. The lease comes with three benefi ts/services
free, while the other benefits/services are allowed at an additional negotiated price. The
landlord must allow three benefits/services to be included free of charge. The landlord is
allowed to deny any service/benefi t. The landlord decides if a security deposit is necessary.
You must negotiate your lease combination as well as the monthly rent payments. The city
of College Park lists the monthly rent of comparable apartments as averaging $ 650.
Below is a list of possible benefi ts/services:
◆
Parking privileges for tenants and guests
◆
Safety: alarm system installed
◆
Safety: insurance for anything stolen
◆
Rodents, insects: exterminator fees
◆
Air conditioning and heating
◆
Allowance of pets on premise/in apartment
◆
Maintenance problems: agree to fix maintenance problems (negotiable) within a
timely (negotiable) manner
◆
Furniture: apartment comes furnished
◆
Utilities: gas and electric bundle
◆
Utilities: water and basic cable and internet (not wireless) bundle
Role A:
Student renter: The tenant is currently a student at the University of Maryland and is look-
ing for an apartment to live in the College Park area. The university is going through a
housing shortage and has decided to “ kick ” all upper classmen off campus. You don’t
have a car, and need a place to live. Since you don’t have a car, this landlord ’s apartment
would be ideal. The landlord apartments are the only ones within 5 minute walking dis-
tance of the university. However, there are other apartments a little bit further. The maxi-
mum you can afford is $ 900/month. You want to get the most benefits/services for the
least amount of money.
Role B:
Landlord: You want to lease your apartment out for the highest price with the least amount
of benefits/services. Each service requires additional money from you to pay the workers.
The university housing shortage has created a demand in off - campus housing. In addition, the
economy isn’t doing well. The competition is steep from the surrounding landlords, so you
want to ensure you lease out your apartment. Furthermore, you need to establish a long - term
relationship with the renter. You want to utilize the renter as a resource to network future
business opportunities. In addition, you want good relations with the renter to ensure future stay.
You must negotiate with the renter to determine the appropriate set of benefi ts/services that
will satisfy the student ’s needs in order to secure the desired amount of profit for yourself.
Negotiating a Spring Break vacation: an exercise stressing both collaborative
negotiation principles and recommendations and third party mediation
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532 M. S USAN T AYLOR AND A SHLEY FIELBIG
Part A
Introduction. Part A of this exercise is a negotiation whereby a college student and a travel
agent attempt to come to terms on the price and services associated with a Spring Break
trip to Acapulco, Mexico. The Spring Break trip includes a party package. You will be
negotiating the cost of the Spring Break trip as well as what components will be involved
in the Spring Break trip package. There is additional information you can use to leverage
your negotiation and to compromise the best deal for your role. However, how closely one
matches their roles utility is what will determine how well you did in comparison to the
other groups.
Roles: Student and travel agent .
Background information. All trip options include roundtrip fare and hotel stay fare in prices.
You will negotiate the length and price of the trip. In addition, you will negotiate the
options for the party package combination. The party package must include three options.
One option is free (determined through negotiation which one) while the others are avail-
able at a negotiable cost. All prices listed are the suggested price and are negotiable. The
travel agent has the right to change any price at their discretion.
Basic information:
Length of trip
5 days 7 days
Cost
Money due at time of booking
$800
$400
$1,000
$500
Party package information: Based on negotiation; one option is free and any other two
options for list price (must have three; can have more)
Other things to consider:
◆ Taxi fare (not all clubs are within walking distance)
◆ Passport (need to renew?)
◆ Doesn’t include tourist activities (i.e. jet skiing, parasailing, bungee jumping, cliff
diving)
◆ Phone card – phone coverage might not reach into Mexico
◆ Travel protection – can be provided for an additional $ 68
Role A:
Student: You want to party on Spring Break. Your parents agreed to pay $ 1000 of your
Spring Break vacation. This is money you have upfront. You have saved $ 300 of your own
money, which is available to you upfront as well. You are able to earn an additional $ 350
before your Spring Break trip. This money will not be available to you until the week before
the trip. Your main motivation is to party hard for the least amount of money. You will
need to bargain to get the best components out of the package deal. You will highlight the
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Cost Condition 1 Condition 2 Condition 3 Condition 4 Condition 5
Option 1 Open bar; free $150 Need to tip Can’t bring
drinks at hotel the bartender drinks onto the
everyday beach; must stay
at hotel pool
Option 2 VIP Entrance VIP entrance Free drinks all Need to tip the VIP entrance Includes
into clubs every is instant; regular night; without bartender to get is only for the entrance into
night entrance average VIP pass service club specifi ed VIP concert
wait time for drinks average for that night (Fergie, DJ
entry 1 hour $6/drink (different club Scribbles,
each night); Fat Joe) at club;
can’t choose net worth $100
which night you
get to go to
each club
5 night option $300
7 night option $450
Option 3 VIP Admittance $220 Include Free drinks Entrance on
into day parties admittance into: while at events the day is $30;
foam party, booze and drinks
cruise, beach without pass
Olympics, and are $6/drink
beach BBQ
Option 4 Food vouchers $140 Applicable at Modifi ed menu Modifi ed Guaranteed safe; Get two a day;
for 7 days certain restaurants options portion size no threat can only be used
only of Montezuma’s at specifi ed times.
revenge (intesti- Options include:
nal sickness from breakfast, lunch,
drinking/eating dinner and late
food prepared in night
infected water)
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534 M. S USAN T AYLOR AND A SHLEY FIELBIG
limitations or drawbacks of the options as well as allude to additional costs not included
in the package option deals to get the best price. You want to ensure you have the most
opportunities to enjoy yourself as possible. In addition, you can always book with another
travel agent.
Role B:
Travel agent: The economy isn’t doing well and your salary depends on your ability to fi ll a
plane for Spring Break. You want to book your student ’s trip at the highest cost. For each
trip booked .01% of the total cost of that booked trip is deducted off your next vacation.
You want to book the trip quickly in order to maximize the amount of clients you can
book. You also want to maintain good relationships with your clients in order to build a
network of future clients through the student. Thus you want a happy client who will tell
their friends to book with you as well. The more people that book through you, the more
money you receive off your next trip. Your main motivation is to emphasize the most
expensive options of the party package. You will highlight the benefits of each option and
try to convince the student they need all options for the best Spring Break experience.
You want to book the student the most expensive trip you can, in a timely manner. You
have the power to change the list price for any of the options if doing so aides in your
negotiation.
Part B – Mediating a settlement between student and travel agent after a
failure to agree
Introduction. Part B assumes that two days before Spring Break, the student and the travel
agent are still unable to reach a mutually satisfying agreement over the Spring Break trip,
leaving the student with no vacation options. As a last course of action, the student con-
tacts his/her father, a talented manager in the computer industry and asks for help. The
father, an experienced manager who has recently read Chapter 28 agrees to mediate
the dispute in order to try to help the parties reach agreement. Please assume the mediator
role in this exercise and use the principles and recommendations for third party
mediation. Your interests are simply to help your son or daughter settle on an affordable
and enjoyable vacation without putting the travel agent at a disadvantage, to strengthen
your own mediation skills through practice and to teach both parties something about the
value of effectively implemented mediation in resolving confl icts between two parties.
Joint discussion questions for the above exercises
1. What kind of negotiation did you use in the exercises, distributive – win/lose or
collaborative – win/win? Why did you choose this type?
2. Which negotiation principles did you rely on most heavily? Why? How well did they
work?
3. Did you reach an agreement with your partner? What were the terms? How satis-
fied were you both with the agreement and what effect do you believe it will have on
your ability to work together on a deal again?
4. What was the outcome of the mediation exercise? Why did this outcome occur?
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535 MANAGE CONFLICT THROUGH NEGOTIATION AND MEDIATION
5. Did the mediator assertively apply diagnostic, contextual and substantive interven-
tions during the mediation attempt? What, if any, effect did these behavioral
interventions have?
6. What might the mediator have done differently to enhance the likelihood of settlement
between the parties?
7. Did any boundary conditions exist that negatively affected the impact of the medi-
ation interventions? Please explain.
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29
Sustain Organizational Performance
through Continuous Learning,
Change and Realignment
MICHAEL BEER
We are living in a world in which the only constant is change. Companies must respond to
rapid changes in markets and technology if they are to survive and prosper. Senior execu-
tives must, in turn, lead a process of change that develops employee dissatisfaction with
the status quo and realigns the organization as a total system with new business realities.
Consider the case of Apple Computer (Beer and Gibbs, 1990 ). Founded by Steve Jobs
and Steve Wozniak in a garage in Silicon Valley in 1977, the company was the fi rst to
develop and produce a personal computer. The Apple II, and its successor the Macintosh,
led the industry in technology, design, and user friendliness. In 1980 the company had
virtually 100% of the market. It had grown 100% a year and was among the fastest grow-
ing companies in the world. In 1990 its revenues reached $ 5.5 billion and employment
reached 14,500. By 1997, however, the company ’s market share was down to 3% and its
revenues and number of employees were shrinking. It was also losing money and had lost
the race to dominate the personal computer market to Dell, Compaq, and IBM.
Apple ’s dominance in the computer market declined despite the fact that in 1983 John
Scully, at the time President of PepsiCo, was brought in as Apple ’s new CEO to enable the
company to cope with new competitive realities. As we shall see throughout this chapter,
Scully failed to lead an organizational learning and change process from which he and his
top team could learn about barriers to organizational and leadership effectiveness. His task
was to mobilize energy for change among senior executives by creating dissatisfaction with
the status quo and then develop a new organization – structure, systems, people, processes,
and culture – needed to compete in the volatile computer industry. Such changes would
have enabled Apple to develop organizational capabilities and behaviors it did not possess.
Though the company had talented and creative technical people it lacked several essen-
tial organizational capabilities associated with success in uncertain and rapidly changing
c29.indd Sec2:538 6/17/09 3:23:15 PM
538 MICHAEL BEER
environments (Lawrence and Lorsch, 1967 ; Kotter and Heskett, 1992 ; Lawler, 1997 ; Miles
and Snow, 1978 ). They are:
1
◆ Coordination between functions, businesses and geographic regions around businesses
and/or customers is essential for speed of response to customer needs and a cost -
effective operation. Apple ’s individualistic culture and lack of cross - functional teams
made coordination between marketing, sales and research and development diffi cult.
Consequently, the company failed to recognize and respond to a rapidly growing
business market that demanded new and lower cost products.
◆ Commitment to customer needs and an economically successful business is essential for
any enterprise. Without that commitment employee ’s interests are not aligned with
the purpose of business. Apple ’s people were committed to technical innovation not
meeting customer needs in a changing market. This blinded them to the possibility
that a less elegant and lower cost technical solution being introduced by competitors
(low cost PCs with a DOS operating system) might succeed.
◆ Competence in the activities most critical to success, as well as in management and
leadership, are essential. Some companies rely on selling or distribution for suc-
cess. Others on merchandising. Still others may rely on technical skills in research
and development, the capability that made Apple a success in its early years. But
without effective leadership and management, firms like Apple cannot mobilize
technical and functional competencies into a coordinated effort and results. That
was certainly true of Apple Computer. As a result of its rapid growth Apple ’s
technically excellent people were promoted to key positions, but they lacked
leadership and management skills to develop the coordination Apple desperately
needed to succeed.
◆ Honest conversations that enable people at all levels to voice their views and concerns
are essential in an uncertain and rapidly changing environment. They enable an
airing of differences and lead to a resolution of conflicting views. This in turn
ensures good decisions. For this trust and skills in dialog are needed. Top manage-
ment must communicate to lower level its intended direction and lower levels must
feel free to communicate to top management if they believe the direction is fl awed
or organizational barriers exist to successful implementation. At Apple lower level
managers that saw the need for lower cost computers were ignored. Similarly, dif-
ferences between key functions – at Apple research and development (R & D) and
marketing – were never discussed in a way that would enable R & D to understand
threats marketing perceived.
◆ Creativity and innovation in both technical and administrative matters are essential for
a business to retain its competitive edge. Apple succeeded largely on the basis of
its creativity and innovation in technology. But it lacked the capacity to innovate
and change its approaches to organizing and managing people, something that was
essential if it was going to succeed in a changing marketplace.
1
The term behavior incorporates the description of actual behaviors as well as the
description of attitudes and skills that are proxies for behavior.
c29.indd Sec2:539 6/17/09 3:23:15 PM
SUSTAIN ORGANIZATIONAL PERFORMANCE THROUGH CONTINUOUS LEARNING 539
Leading organizational change is about defining a new strategic direction for the
business and realigning its structure, management processes, systems, people skills, and
culture so that needed organizational capabilities required to implement the new direction
emerge. Of course, implementing the new direction typically also leads to redefi nition of
direction as the organization learns through the process of implementation what works
and what doesn’t work. That is why the behaviors above, particularly open communi-
cation and creativity, are so essential to the capacity of the organization to adapt and
renew itself. The effectiveness of an effort to lead change should be judged by the extent
to which it develops the five Cs – the organizational capabilities listed above – and the
extent to which it develops the capacity of the organization to renew itself in the future.
The story of Apple illustrates the tendency of all organizations to stop learning and
changing in the face of success. Why does this happen to organizations? What are the
essential principles of organizational change that leaders in John Scully ’s position should fol-
low if they are to overcome the natural tendency of organizations to maintain the status quo.
BASIC FACTS ABOUT ORGANIZATIONAL BEHAVIOR AND CHANGE
This section presents basic facts managers must understand about organizational behav-
ior and change if they are to succeed in the difficult task of leading change. They explain
why organizations resist change and what is needed to change them (Beer, Eisenstat, and
Spector, 1990 ; Katz and Kahn, 1978 ; Pfeffer, 1997 ; Schein, 1990 ).
Organizations are complex open systems
A variety of organizational facets – structure, human resource policies, management pro-
cesses, values and skills of people, and the leadership behavior of top management – conspire
to produce an organization’s distinctive pattern of behavior. These facets are interdependent
and are continuously engaged in a process of mutual adaptation to achieve “ fit ” or con-
gruence with the organization’s chosen strategy (Lawrence and Lorsch, 1967 ). By an open
system we mean that the organization is subject to influence by the external environment,
largely through the influence of markets, society and/or the larger corporate organization
(if the organization is a subunit of a larger corporation).
Figure 29.1 illustrates the key dimensions that must fit together – be aligned – for an
organization to be effective. It suggests that organizational behavior is shaped by four
forces – the organization’s environment and the emergent strategic task the organization
must manage to succeed, the organization’s design, the people selected and promoted,
and the behavior of leaders and their top team. Organizations naturally evolve toward an
equilibrium state in which these elements fit tightly. In the short term, fit leads to organiz-
ational effectiveness. The organization has developed certain behaviors required for its
success and has developed leadership behavior, structures, and systems to cause these
behaviors consistently. When the environment changes and places new demands on the
organization, leaders must realign the organization to fi t new circumstances.
Implicit in this formulation is a contingency perspective. It holds that the best way to
organize and manage people depends on the nature of the situation and strategy ( Lawrence
and Lorsch, 1967 ; Miles and Snow, 1978 ). We know for example that the optimal structure
c29.indd Sec2:540 6/17/09 3:23:16 PM
540 MICHAEL BEER
People
Organization
Design
Organizational
Behavior/Culture
Environment/
Strategy
Leader and Top
Team
FIGURE 29.1 Organizational alignment model
of an organization depends on the nature of the environment and strategy ( Miles and
Snow, 1978 ; Nadler and Tushman, 1988 ). At the same time there is growing evidence that
sustainable advantage depends on organizing and managing people around a set of values
and principles including the use of teams, collaboration, symbolic egalitarianism, training and
development for employees, and open communication (Pfeffer, 1998 ; Beer, 2009 ). The fi ve
Cs listed above reflect these findings. The implication is that the change process itself must
be aligned with these principles if they are to become embedded in the organization.
ORGANIZATIONAL ALIGNMENT DEVELOPS A
D
ISTINCTIVE AND PERSISTENT CULTURE
Culture is defi ned as the assumptions, beliefs, values, and resultant behavior leaders invent
or discover to solve problems in the external and internal environment. It is what these
leaders teach new members as the correct way of perceiving, thinking, and acting to
solve problems (Schein, 1985 ). The tendency of managers to attract, select, and promote
people based on how similar they are to those already in the organization increases the
strength of the culture (Schneider, 1994 ). Under the leadership of its founder Steve Jobs,
Apple Computer attracted, selected, and promoted employees who were individualistic
and committed to elegant technology. This created a strong culture that demanded
conformity to these values of and eschewed more pragmatic business considerations.
That companies develop a persistent culture and have difficulty in adapting is evident
in the low survival rate of companies ( Miller, 1990 ; Foster and Kaplan, 2001 ). A substan-
tial number of the Fortune 500 companies 20 years ago – Gulf Oil, Digital Equipment,
International Harvester, Scott Paper, US Steel, and Westinghouse – no longer exist.
Organizations vary in the strength of their culture, however. Moreover, subcultures typi-
cally exist in various parts and subunits of the organization. Organization change involves
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SUSTAIN ORGANIZATIONAL PERFORMANCE THROUGH CONTINUOUS LEARNING 541
confronting the persistent pattern of behavior that is blocking the organization from higher
performance, diagnosing its consequences, and identifying the underlying assumptions and
values that have created it. That process must go on at the corporate level as well as in
multiple businesses and operating units, each with a different strategic task and subculture.
Organizational behavior is resistant to change
Fundamental organizational change calls into question existing patterns of management – the
authority, decision rights, and values of existing managers and departments. When a
changing environment threatens an organization’s capacity to survive, top management
is challenged to redefine how it will compete. It must define new objectives and a new stra-
tegic task. It should not be surprising that making these changes is painful. Key members of
the organization will experience psychological and sometimes material losses (Beer, 1991 ).
Their power and status may diminish. Past relationships may be disrupted. New skills may
be required threatening employees ’ sense of competence and self - esteem as well as their
careers and job security. The perception of these potential losses leads to resistance. For
example, research and development – the technical function at Apple computer – stood
to lose some of its influence in designing products if Apple were to compete more aggres-
sively in selling personal computers to the business market. Consequently, careers, self -
esteem, and the very sense of identity and meaning technical people derived from work
were also threatened.
All human beings employ emotional and cognitive processes to defend themselves against
threat (Argyris and Schon, 1996 ). Moreover, people make sense of past behavior by forming
beliefs that rationalize them and by escalating commitment to them. These common human
characteristics prevent managers from learning that their actual behavior – their theory
in action – is inconsistent with their stated aspiration – their espoused theory. These human
characteristics cause organizational policies, management practices, and leadership behav-
ior and style to persist in the face of new realities unless skills and norms of inquiry and
constructive conflict resolution are developed (Argyris and Schon, 1996 ). All attempts to
change organizations must overcome defensiveness of individuals and groups, cause learn-
ing to occur, or result in the replacement of individuals not capable of learning. Effective
change efforts attempt to maximize the amount of learning and minimize the need for
replacement. This enables the organization to retain the wealth of company - specifi c knowl-
edge about customers, products, and technology and retain commitment that is otherwise
lost when key people are replaced.
Substantial evidence exists that many efforts to change organizations do not succeed
in making a fundamental transformation in organizational culture (Beer et al., 1990 ;
Schaffer, 1988 ; Hall, Rosenthal, and Wade, 1993 ). They produce only superfi cial change
due to the fact that underlying assumptions and beliefs about the business and how it
should be managed are not confronted. These change efforts are characterized by wave
after wave of programs – education and training initiatives for all employees, continuous
changes in structure, the development of mission and value statements, or initiatives such
as re- engineering and total quality management.
Consider a large industrial enterprise whose financial performance lagged the industry.
Management felt that the cause was the ineffectiveness of its managers. With the help of
a new senior human resource, executives hired from a company known for its best human
c29.indd Sec2:542 6/17/09 3:23:22 PM
542 MICHAEL BEER
resource practices launched a four week management education program in an effort to
change the company. The program ’s faculty was world class and the content highly relevant
including a module on competition and strategy, organizational effectiveness, leadership,
and interpersonal skills. The last module of the program involved participants working
on analyzing and making recommendations to top management about an important cor-
porate problem. Participants were so enthusiastic about the potential of the program for
changing the company that they asked top management to go through the program. They
were certain that if the company was to adopt the ways of thinking and doing embed-
ded in the program the corporation would regain its competitive edge. Top management
agreed to go through the program. Despite the enthusiasm of all parties involved in the
program (faculty, students, and top management) three years later top management and
managers who went through the program indicated in interviews and surveys that very
little change had occurred in the company ’s pattern of management.
John Scully ’s efforts to change Apple Computer also suffered from programmatic
change, thereby delaying a dialog about the real underlying problems. During a five - year
period, Scully changed the organization’s structure four times but coordination between
marketing, sales, and R & D and communication between top management and lower lev-
els did not improve, nor did Apple ’s performance live up to expectations.
Programs fail because the top management team has delegated the task for change to
a staff group or consultants. In this way, they avoid the difficult task of confronting the
underlying causes of the problems faced by the firm. These are often connected to their
own and other managers ’ assumptions and beliefs about the nature of the business and
the best means for organizing and managing people. It is far easier for a CEO to obtain
agreement from key people to a program or initiative than it is to breach defenses that
block learning about deeper underlying problems. These require leadership – the hard
work of confronting problems and developing commitment to change and making dif-
ficult decisions about people who will not or cannot change. It should come as no surprise
that the capacity to confront conflict has been found to be associated with a firm ’ s ability
to succeed in highly uncertain and turbulent environments where the rate of change has to
be rapid and continuous (Lawrence and Lorsch, 1967 ) .
FORCES FOR ORGANIZATIONAL CHANGE:
D
ISSATISFACTION AND LEADERSHIP
Given the natural tendency of all management to defend the past and resist change, it has
been observed that change does not seem to occur unless a sense of urgency exists among
the organization’ s leaders (Kotter, 1997 , 2008 ). This does not typically occur unless they
become highly dissatisfied with the status quo (Beer, 1991 ). Dissatisfaction with the status
quo arises naturally as a result of problems that threaten the firm ’ s performance and even
survival. Financial losses, a long and protracted decline in stock price, shrinking market
share, loss of a major customer, high employee turnover, or a union strike are all forces
that can bring management to a realization that change is needed. The more severe the
crisis the higher the dissatisfaction with the status quo and the more energy will be released
to take action. And it takes enormous amounts of human energy to confront entrenched
assumptions and practices.
c29.indd Sec2:543 6/17/09 3:23:22 PM
SUSTAIN ORGANIZATIONAL PERFORMANCE THROUGH CONTINUOUS LEARNING 543
Severe problems may not be enough, however. As we saw in the case of Apple
Computer, management was able to ignore dramatic changes in their markets and a
shrinking market share. The missing ingredient was leadership (Beer, 1991 ; Kotter, 1997 ).
John Scully was unable to mobilize the commitment to change of key people, particularly
his top team. He lacked the courage to engage people in a dialog about historic assump-
tions, practices, and norms of behavior. Change leaders, it has been found, possess the
capacity to confront difficult issues. Indeed, companies that succeed in transforming them-
selves appear to do so as a result of changes in their top team ( Virany, Tushman, and
Romanelli, 1992 ). Leaders, typically new leaders, develop a top management team that is
like minded about the need for and the direction of change (Beer and Eisenstat, 1996 ). A
united and effective top team results in improvements in coordination and thereby consist-
ent action across all parts of the organization. Without this, lower level employees perceive
an inconsistency between the new direction espoused by top management and their actual
behavior. This raises doubts about top management ’s commitment and makes it unlikely
that commitment to change at lower levels will develop.
Consistency between means and ends
There is great variation in the consistency between change ends and means chosen by
leaders. To the extent that means contradict the values and practices leaders intend to
embed in the future organizational state, people question management ’s true commitment
to the values and practices they espouse. Trust between leaders and lower level people
declines. Lowered trust makes it more difficult for leaders to engage people and mobilize
commitment to change.
Leaders who intend to develop high performance organizations characterized by the
behavior and practices discussed above (good coordination and teamwork, high creativity,
open communication, high commitment, and good interpersonal and leadership skills) are
not successful unless they involve people in the change process (Beer et al., 1990 ). Contradictions
between words and deeds are inevitable, of course, in any complex organizational change
process. But a strong bias towards involvement appears to be necessary. Just as impor-
tantly, management ’s willingness and skills in encouraging lower levels to raise issues of inconsistency
between their (management ’s) words and their actions builds the trust and partnership
with lower levels that high performance organizations typically embody.
HOW TO LEAD CHANGE: SEVEN
S
TEPS FOR SUCCESSFUL CHANGE
The dynamics of organizational behavior and change discussed above translate into seven
steps a general manager must take to lead change in his or her organization. These steps
assume that the leader is dissatisfied with the status quo and feels that change is needed
to cope with new competitive realities. Effective leaders are always on the lookout for a
discontinuity in the organization’s environment, says Andrew Grove, CEO of Intel. His
book, Only the Paranoid Survive (Grove, 1996 ), captures well the need for constant vigilance.
Unfortunately, incumbent top managers are often slow to recognize the need for
change and/or are too timid in confronting managers and workers below them with the
c29.indd Sec2:544 6/17/09 3:23:22 PM
544 MICHAEL BEER
need for change. Under these circumstances change cannot take place until the leader is
replaced. The price of not being vigilant can be seen in statistics for Fortune 500 CEO
tenure. Average CEO tenure in 2008 is 3.2 years versus 10.5 years in 1990. Leaders who
are not dissatisfied with the status quo are removed by boards of directors so signifi -
cant organizational change can occur. Even new managers, however, can fail to manage
change if they do not understand and/or are unskillful in leading change. As a new CEO
John Scully had nine years to change Apple Computer. He failed because he did not take
the steps outlined below.
1. Mobilize energy for change
Energy for change must be mobilized in the top management team as well as in key
managers at lower levels. It is mobilized by creating dissatisfaction with the status quo as
was noted above. The following three actions can mobilize energy for change (Beer, 1991 ).
◆ Demanding improved performance and behavior – Leaders can energize organizational
members by articulating demanding goals and standards for behavior. When Jack
Welch took over General Electric in the early 1980s he told all business unit
managers that they had to get their business units to be number 1 or 2 in their
industries or the business would be sold. Stan Mahalik, Executive Vice President
for Manufacturing at Goodyear Tire and Rubber, energized his 100 plant managers
around the world to change their operations by demanding that unless their tires
met certain quality standards they would become scrap. This energized them to
search for new technology and management approaches. Percy Barnevik, CEO of
ABB, articulated new performance goals and behavioral standards at a worldwide
meeting of the top 500 executives in the company within weeks after a merger that
formed the new company. With regard to behavior, taking action even if it is wrong,
he said, is better than not taking action at all.
◆ Exposing the top team and employees to feedback – A general manager who is dissatisfi ed
with the status quo has come by this view through awareness of low quality, high
cost, poor profi ts, dissatisfied customers, or unhappy shareholders. Exposing manag-
ers and workers to this information through presentations as well as direct experience
is a powerful way to unleash energy for change. When Louis Gerstner took over IBM
after it had fallen on hard times in the early 1990s he asked all top executives to visit
at least one customer a month. These visits gave them new insights into what was
happening in the industry and how IBM needed to respond. Likewise, staff groups
in corporations have been energized to become more effective when they have been
exposed to feedback from line organizations they serve. Manufacturing plant mana-
gers faced with a resistant workforce and union have taken workers and union leaders
on trips to see customers, displayed competitive products in the lobby of the building,
and informed employees about the plant ’s financial performance through presen-
tations and display of information on bulletin boards.
◆ Exposing employees to model organizations – Exposing managers and lower levels to
radically different practices in other companies or within the same company can
unleash energy. This has been referred to as benchmarking best practice. A visit
to an innovative team - based manufacturing plant unleashed energy in managers,
c29.indd Sec2:545 6/17/09 3:23:23 PM
SUSTAIN ORGANIZATIONAL PERFORMANCE THROUGH CONTINUOUS LEARNING 545
workers, and union leaders to transform Navigation Products, their business unit,
to a similar model of management, one that promised to improve coordination
across functions, build trust, and improve communication (Beer et al., 1990 ). In the
early 1980s the automobile companies sent managers by the hundreds to Japan to
learn about manufacturing methods that gave Japanese manufacturers a signifi cant
edge in quality, though in this instance what they learned failed to be translated into
change rapidly enough given the state of the automobile industry in 2008.
2. Develop a new compelling direction – strategy and values
Feedback and information is not enough. A new direction must be developed. To develop
this direction, change leaders orchestrate a series of discussions in their management team to
develop an understanding of what this information means for change in the company ’ s direc-
tion. Exactly how successful is the organization being in its product or service offering? Why
is it not successful? How committed are people? How effective is the organization? What is
the implication for the future survival and success of the organization? What should be the
new objectives and strategy? What should be the guiding values of the organization? What
are the implied priorities? Discussing these questions in the light of the feedback and data to
which managers have been exposed can lead to a new understanding and sense of urgency.
Jerry Simpson, general manager of Navigation Products, held a series of meetings with
his top team that led them to defi ning new and ambitious goals for the business and a new
direction (Beer et al., 1990 ). A study of 25 business units undergoing change found that
units that had changed the most were more likely than lagging units to have established
a clear and broadly understood link between business problems and the need for change
(Beer et al., 1990 ). Making the link is what makes the new direction compelling to mem-
bers of the organization. It is quite important for leaders to involve the whole top team in
the formulation of the new objectives and strategy. And, it is important for that top team
to involve other key managers in discussing and critiquing their new strategy. This builds the
commitment needed to implement the new direction.
Moreover, the general manager or CEO can use the work of developing a new
direction to develop their top team ’s effectiveness. Research shows that effective strategy
formulation and implementation depends on top team effectiveness (Eisenhardt, 1989 ;
Beer and Eisenstat, 2000 ). Team effectiveness is developed through encouraging new
behavior, coaching, and if needed replacement of those key executives who do not play a
constructive role in the team and/or do not become committed to the new direction.
3. Identify organizational barriers to implementing the new direction
Often the resistance to change is at the highest levels of the company (Miller, 1990 ;
Finkelstein, 2003 ). Hierarchy insulates top management teams from the effects of their
behavior and policies. Exposing top management to feedback about what employees
perceive as barriers to implementing a new strategy further creates dissatisfaction and
identifies what changes in organization and behavior are needed to implement the new
strategy. John Scully began his belated and ultimately unsuccessful effort to change Apple
Computer after an attitude survey showed strong negative sentiments in the company
about the lack of strategic clarity and problems with top management ’s leadership.
c29.indd Sec2:546 6/17/09 3:23:23 PM
546 MICHAEL BEER
Eisenstat and I (Beer and Eisenstat, 2000 ) asked top teams, as part of a planned effort
to develop an organization capable of strategy implementation, to appoint a taskforce of
eight of their best employees. Taskforce members interviewed organizational members
one or two levels below the top about barriers to strategy implementation. The taskforce
then fed back its findings to top teams using a carefully crafted process that enabled the
taskforce to be honest and management to be non - defensive (Beer and Eisenstat, 2004 ).
Six barriers were consistently identified across many organizations and, not surprisingly,
they obverse the principles for an aligned organization and the change principles dis-
cussed in this chapter. The barriers were:
◆
Unclear strategy and confl icting priorities;
◆
An ineffective top team;
◆
A general manager who was either too autocratic or too laissez - faire (not confront-
ing problems);
◆
Poor coordination;
◆
Poor vertical communication;
◆
Inadequate leadership and management and its development at lower levels.
Because these barriers were known to everyone but were not discussible we called
them the “ silent killers.” Like hypertension, they can cause an organizational heart
attack – organizational failures in implementing strategy. Until a commitment is devel-
oped by top teams to overcome the fundamental management problems represented by
the silent killers it is unlikely that a new strategic direction can be implemented or the
organization aligned with that strategy. Many change initiatives fail because underlying
management problems are not confronted and overcome. Change leaders should, there-
fore, make an effort to collect data about barriers perceived by lower levels so plans
for change can incorporate their voice about leadership and organizational problems.
Efforts to change organizations without this step lead to cynicism and low commitment.
Of course, this requires top managers to be open to learning about their own role in
the organization’s performance problems. If this does not happen, as it often does not,
a new general manager or CEO will be appointed when the silent killers and their
consequences begin to affect performance in a signifi cant way.
4. Develop a vision of how the business will be organized for success
Having heard the voice of lower level employees regarding barriers to achieving the new
strategic direction, the top team must work together to fashion a vision of the organization’s
future state (see Chapter 20 , this volume). They will have to envision how the elements in
the organizational model presented in Figure 29.1 will need to change to enable a change
in organizational behavior. The following questions will have to be answered:
◆ How should the organization be redesigned to ensure the appropriate coordi-
nation between value creating activities that must work together to implement the
strategic task defined in step 2 above? Redesign of the organization will include
changes in structure, systems, and planning process. These changes are intended
to change roles, responsibilities, and relationships so that the new strategy can be
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SUSTAIN ORGANIZATIONAL PERFORMANCE THROUGH CONTINUOUS LEARNING 547
implemented. For example, business, customer or product and project teams may
be created; change from a decentralized divisional structure to a matrix structure
may be necessary; the number of hierarchical layers may be reduced; the size and
role of corporate staff may change.
◆
How will the top team ’s own leadership behavior change to enable the new organiz-
ation to function effectively? These changes may include modification in the CEO ’s
style and/or changes in the frequency and focus of top management meetings
and work. For example, the CEO of Becton Dickinson received feedback from an
employee taskforce that he too closely supervised the corporate strategic planning
process and that there were too many meetings. He responded by delegating more
responsibility to his sector presidents and changing the focus and content of his top
team ’s management work (Beer and Williamson, 1991 ).
◆
What changes in people ’s skills will be needed to ensure that the new organization
works effectively? Changes in human resource policies and practices will be needed
to ensure that the right people with the right skills occupy the new roles designated
by the reorganization.
5. Communicate and involve people in implementation
The new organizational vision has to be communicated to the whole organization. People
in the organization should be told why a new strategy is needed and how the new organiz-
ational arrangements will help shape new behavior and better performance. Articulating
the links between new competitive realities and the new organization will enable people to
commit to the changes.
Consider what Don Rogers, the general manager of the Electronic Products, a Division
at Allentown Materials Corporation, did in this regard (Beer, 1998a ). Rogers ’ top team
had just decided to implement cross - functional new product development teams to
enhance product development success, a strategic imperative for them to compete in their
industry. Rogers and his whole top team visited 13 locations over a two - month period to
communicate with every salaried employee how the new organization would work and
why they were adopting it. The why included telling all employees about competitive
problems that led to change and organizational barriers that had been uncovered through
a survey and diagnosis of the division, including problems people perceived in Rogers ’
own leadership. Communication was two - way. After Rogers and his team presented
their change plan, employees met in small groups to discuss what they heard. They then
assembled to raise questions and challenge management. A dialog between top and bottom
is essential for top management to learn about potential problems they will encounter in
implementation so that they can make changes in their action plans accordingly. And that
dialog must be continuous and ongoing for change to succeed.
6. Support behavior change
After the new organization is implemented, employees, particularly those whose roles and
responsibilities have been most impacted by the organizational changes, will need support
to develop needed skills and attitudes. This is often done through consultants who coach
individuals and teams. It can also be done through training and education programs.
c29.indd Sec2:548 6/17/09 3:23:23 PM
548 MICHAEL BEER
In the Electronic Products division mentioned above, consultants sat in on all team
meetings for the first six months and coached the teams and their leaders in how to work
in these new unfamiliar arrangements. Moreover, consultants brought together key
managers in pairs of departments whose relationships were blocking coordination and
facilitated a discussion that led to improvements. The purpose was to change behavior
and skills within teams, thereby increasing the probability of their success.
7. Monitor progress and make further changes
Organizational change is an action learning process. As the new organizational arrange-
ments are enacted, much is learned about how to modify structure, systems, policies and
practices, and behavior to achieve intended results. Top and lower level managers discover
how to carry out their new roles and responsibilities and gain insights into how their own
styles and skills need to be changed. Those who cannot adapt decide to leave on their
own or are asked to leave. As time goes on the organization begins to function more effec-
tively and this is translated into better performance. Because the business environment
and strategy are constantly changing, survival requires organizations to recycle these seven
steps periodically so that the organization can be realigned with new realities.
ORCHESTRATING CORPORATE-WIDE
S
TRATEGIC CHANGE
A large organization is typically made up of many interdependent subunits, each a busi-
ness unit, and regional and country organizations or operating units such as manufactur-
ing plants, stores, and offices. Leading the organization through the seven steps discussed
above is the responsibility of unit leaders at every level. Corporate - wide change requires
top management to play two roles (Beer, 1980 ; Ghoshal and Bartlett, 2000 ). They must
lead a change process within the top management unit. This process would define how the cor-
porate whole will coordinate the activities of the corporation’s many subunits to achieve
the wider purpose of the corporation. But that is not enough. Corporate leaders must
also orchestrate a process which encourages leaders in each of the corporation’s subunits to lead their own
seven step learning and organizational alignment process (Beer and Eisenstat, 1996 ). Innovations in
organizing and managing will occur from such a process and it is top management ’ s role
to orchestrate the diffusion of managerial innovations in leading units through conferences,
visits to leading edge units and, most importantly, through the transfer of successful
leaders from leading edge to lagging units (Beer et al., 1990 ).
Where should corporate - wide change start? Sometimes subunit change comes about
naturally at the periphery, in businesses units, manufacturing facilities, or stores far from
headquarters. Often these are subunits offering quite different products or services from the
parent. It is in these units that managers are faced with different competitive demands
and/or have the freedom to innovate and lead change. Under these circumstances changes
are only adopted by other organizational subunits if top management actively works to
move the innovations and the managers who led them to other parts of the large company
(Beer et al., 1990 ; Walton, 1987 ).
c29.indd Sec2:549 6/17/09 3:23:23 PM
SUSTAIN ORGANIZATIONAL PERFORMANCE THROUGH CONTINUOUS LEARNING 549
Clearly, corporate - wide change will occur much more quickly if top management has
conviction that change is needed. Top management ’s role is to encourage, even demand,
that managers of independent business units, manufacturing plants, retail stores, or
country organizations (in global companies) lead change in their units (Beer et al., 1990 ;
Ghoshal and Bartlett, 2000 ). Jack Welch who led General Electric through a major trans-
formation in the 1980s and 1990s required key managers to employ a process that required
leaders to listen to key people about barriers to effectiveness, to assess their root causes
and realign it for greater effectiveness (Ulrich, Kerr, and Ashkenas, 2002 ). Top manage-
ment ’s role is not to drive change through corporate staff and consultant - led programs.
As discussed earlier these will fail to mobilize energy and leadership at the unit level needed
for change to succeed. Moreover, corporate programs prevent top management from
discovering who of their subunit managers are able to lead the seven step organizational
learning and change process, an indicator of their leadership potential.
CASE EXAMPLES
I will first summarize briefly the case of Apple Computer used throughout this chapter to
illustrate an unsuccessful effort to lead change. I then review two successful change efforts.
Apple Computer: a case of failure
John Scully did not restore Apple to its former dominant market position. He was unable
to develop sufficient dissatisfaction with the status quo to produce the energy needed for
change. He never created a top team capable of agreeing on Apple ’s new strategic direc-
tion. As late as 1988, he appointed to a key top management position an executive whose
strategic vision was diametrically opposite to the one that Apple had to take to cope with
new competitive realities. His inclination to avoid conflict prevented him from confronting
key strategic and organizational issues. And he never led a change process that enabled
his top team to discover and discuss the silent killers that blocked them from realigning
their organization with their intention to succeed in selling Apple ’s offering to the busi-
ness market, one quite different from the education market where they had been success-
ful. Consequently, shareholders, customers, and employees failed to derive the value (stock
price, lower cost products, and career opportunities, respectively) that a successful enter-
prise would otherwise have yielded. Apple ’s success in the late 1990s to the present under
the leadership of CEO Steve Jobs represents a new strategic era enabled by a “ new ” CEO
( Jobs was actually Apple ’s founder and first CEO but was replaced by Scully). After Scully ’ s
departure, Jobs articulated a new strategy and successfully aligned the organization with it.
Hewlett Packard ’s Santa Rosa Systems Division (HP/SRSD):
successful unit level change
The Hewlett Packard Santa Rosa Systems Division is a case of successful change at the
business unit level but failure by HP ’s top management to spread innovation to other
units (Beer and Rogers, 1997 ). In 1992, HP/SRSD was formed to manage and grow a
new measurement systems business for HP. By 1994, the division was experiencing many
c29.indd Sec2:550 6/17/09 3:23:24 PM
550 MICHAEL BEER
problems and its performance did not meet top management ’s expectations. There were
numerous reasons for this. The division had organized itself and was being managed
in a manner similar to HP ’s traditional test and measurement divisions. Yet the systems
business was significantly different, particularly with respect to the need to customize sys-
tems. The mismatch between the traditional approach to organizing and managing and
the demands of a very different business environment and strategy created many tensions
between functions and between the top team and the remainder of the organization.
Data collected by a taskforce of the division’s best employees revealed that the six silent
killers described above were blocking organizational effectiveness. Employees perceived
the general manager ’s style was laissez faire. He was not engaging his top team in a dis-
cussion of conflicting strategies and priorities perceived by lower levels. Consequently,
coordination between several functions essential for successful execution of two interde-
pendent strategies was not occurring. Section managers who had been assigned to lead
cross - functional teams were ineffective in gaining consensus in their teams in part because
they lacked experience and skills needed to lead teams and in part because they lacked
formal authority. And, while everyone in the division knew of these problems and com-
plained about them to each other in private conversations, they did not give voice to their
frustrations to the top team. The division manager and his staff were also aware of ten-
sions and knew the division was failing but without feedback from lower levels they did
not quite understand the urgency for change that lower level managers felt.
With the encouragement of his human resource executive, the division manager hired
an external consultant, who, using a process called the Strategic Fitness Process (Beer
and Eisenstat, 2004 ), helped the top team go through the seven step change process. This
enabled these issues to be surfaced for discussion and diagnosis. As a result the top team
identified their own ineffectiveness as a team, the general manager ’s style, and the inef-
fectiveness of cross - functional teams in coordinating functional departments as the root
cause of poor performance. In that same meeting they agreed to reorganize the division
as a matrix structure in order to facilitate coordination, defined new roles for key people
and teams in the new structure, and defined a new role for the top team, one that would
fit the new structure, and created new ground rules for how the top team should operate
and how decisions would be made.
Data collected a year later by the same taskforce and an employee survey showed sig-
nificant improvement, though some issues persisted. Sales had tripled and profits went up
250%. While the division’s management attributed some of the improvements in the div-
ision’s performance to an upturn in the market they served, they felt that they would not
have been able to take advantage of market demand without the changes in organizing
and managing they had made. The division manager and his team also decided to lead
the seven step task alignment process once a year as a way of fostering continuous change.
Five years later HP ’s top management felt that SRSD, which had lagged its sister divisions
in performance and effectiveness, was now a model to which others divisions could look.
Division management had successfully led change and innovated when they adopted the
Strategic Fitness Process for fast change.
ASDA : successful corporate - wide strategic change
ASDA, a UK grocery chain, offers an example of excellent top management leadership
of strategic change (Beer and Weber, 1998b ). With the company £ 1.5 billion in debt and
c29.indd Sec2:551 6/17/09 3:23:24 PM
SUSTAIN ORGANIZATIONAL PERFORMANCE THROUGH CONTINUOUS LEARNING 551
near bankruptcy, Archie Norman was appointed as CEO to turn round the company.
Upon arriving in December of 1991, he met with his top team and quickly resolved to
make changes in its membership. He also announced that while he did not have any pre-
conceived ideas about what the problems were or how to solve them, he would insist on
debate and transparency. He also announced that a “ renewal store ” would be identifi ed
where managers would be given license to innovate in the retail proposition, the physical
space, and in the way people were organized and managed. He promptly began an assess-
ment of the company ’ s situation by making unannounced visits to many of the company ’ s
200 stores. There he talked to lower level workers and store management asking them
to tell him about barriers to company performance. They quickly informed him that for
years headquarters, particularly the trading ( purchasing) department, had not been listen-
ing to stores about what products the stores thought would sell.
Within months he began to reshape the way the top team worked together and the way
the trading department at corporate headquarters communicated with and incorporated
store views into their buying decisions. He told everyone that stores were to be “ loved ”
and listened to. He established multiple mechanisms for communication between head-
quarters and the stores, and between store management and customers and employees.
Within nine months a totally new approach to retailing and organizing and managing a
store was created in the “ renewal store ” by the store manager and his top team working
with a corporate cross - functional team. Sales increased immediately, as did morale. Over
a six - year period virtually every store in the company had gone through the renewal pro-
cess. Sales and profits not only improved, but also improved at a faster rate than its com-
petitors. By 1998 the stock price had multiplied eight - fold.
The success of the renewal program – the heart of the change effort – rested on top
management ’s recognition that it had to spread innovation in the first renewal store to
all 200 stores. What enabled this to happen was top management ’s decision to withhold
financial resources for a given store ’s renewal until its management had exhibited the
behavior and values of teamwork, delegation, and communication top management
thought were critical to store performance. It also became clear to store managers that
their career success was now dependent on leading a renewal process in their own store.
A “ Driving Test ” – an assessment of the extent to which each store ’ s management had
turned barriers like the “ silent killers ” into organizational and managerial strengths – was
employed to assess a store ’s senior team ’s readiness to lead change. In stores where this did
not happen quickly enough they replaced the store manager. Six years after the change
effort began over 50% of store managers had been replaced with leaders who would and
could lead store renewal.
EXCEPTIONS: HOW UNIVERSAL ARE
THESE
CHANGE GUIDELINES?
So long as the objectives of organizational change are the development of organizational
capabilities for sustained competitive advantage over time, the principles and guidelines
offered in this chapter hold. If, however, the objective is to enhance shareholder value
quickly without regard to developing organizational capability for the long term, the
guidelines for change proposed in the chapter do not apply. Management that wants to
obtain short - term improvements in stock price are much more likely to succeed by drastic
c29.indd Sec2:552 6/17/09 3:23:24 PM
552 MICHAEL BEER
restructuring, cost reductions, and layoffs. Considerable evidence exists that such steps
enhance the stock price of companies in the short term, but do not create alignment and
sustained high commitment and high performance (Cascio, 2002 ). This is precisely what Al
Dunlap did in just a few years as CEO of Scott Paper. What was not downsized was sold.
The company no longer exists today.
There are, of course, many instances where top management wants to build organiz-
ational capability for the long term but the company ’s performance is so poor that drastic
steps have to be taken to reduce cost in the short run. Under these circumstances there are
two options (Beer and Nohria, 2000 ). The first option is to phase the change process so that
restructuring (selling businesses that could not be turned around), productivity improve-
ments, cost reduction, and layoffs come first, followed by the action steps outlined in this
chapter. That is what Jack Welch did at General Electric with great success. The second
option is to press forward with both cost reduction and layoffs while also following the
guidelines in this chapter for a change process that builds organizational capability. There
is evidence that such a dual strategy, cost reduction, and investment in building organiz-
ational capability can lead to successful change (Beer et al., 1990 ; Beer and Nohria, 2000 ).
Companies that emphasized cost reduction at the expense of the steps described here did
not successfully change their culture.
Embedded in the change process recommended here is an assumption that leaders
value excellence, people, involvement, teamwork, and learning, including learning about
themselves. Autocratic, controlling, and defensive leaders are unlikely to be able to imple-
ment the seven step change and alignment process. These steps require a commitment
to building organizational capability, organizational learning, and to empowering leaders
throughout the organization to lead change in their subunits. The somewhat slower pace
of capability building change demands that leaders buy time by managing expectations of
capital markets. Again, the case of ASDA described above is an excellent example of what
can be done in this regard. By telling financial markets that they would not see major
improvements in performance for three years, CEO Norman bought the time he needed
to begin to rebuild organizational capabilities.
CONCLUSION
Organizations are complex systems normally resistant to change. Multiple facets of
the organization – its design, its leadership, and its people – become tightly aligned
with the historic strategy of the organization. This tight alignment leads to a dis-
tinctive and persistent pattern of behavior resistant to change. Resistance is caused
by fear that change will result in losses of power, status, esteem, and position. Fear
leads to defensiveness and the inability to consider new alternatives and to learn
about what has to change.
Organizational change is motivated when leaders use environmental pressures,
poor performance, or the prospect of poor performance to develop dissatisfaction
with the status quo. When people realize that the organization’s future is endan-
gered, energy for change is released. Successful change managers lead a process
that approximates the seven steps described in this chapter. They mobilize energy
for change, develop a new compelling direction, identify organizational barriers to
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SUSTAIN ORGANIZATIONAL PERFORMANCE THROUGH CONTINUOUS LEARNING 553
implementing the new strategy, develop a vision of how the organization will operate
in the future, communicate the vision and involve people, support behavior change
through coaching, and recycle learning and change to monitor progress and make new
changes whenever the business faces new strategic infl ections.
In large multi - unit corporations the responsibility for change lies with leaders at
every level, not just with corporate top management. Top management ’s responsi-
bility is to demand that unit managers lead change consistent with the competitive
task faced by their unit. They then spread change to all parts of the larger organiz-
ation through transfer of managers from leading edge to lagging units. They must
also lead change in the top management unit. Change can start anywhere, but will
be slow to spread unless top management creates a context that encourages change
in subunits.
The capacity to lead an organization through change is increasingly important as
the pace of competition and change increases. Effective change leadership enhances
organizational performance, economic value, and organizational effectiveness needed
in the long run. Managers who do not recognize the need for change or lack skills
to lead it will ultimately be replaced as the performance of their organization lags
expectations.
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Workplace. San Francisco : Jossey - Bass .
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SUSTAIN ORGANIZATIONAL PERFORMANCE THROUGH CONTINUOUS LEARNING 555
EXERCISES
Assess the alignment of your MBA program and
diagnose reasons for misalignment
1. Instructor leads a discussion of what students expect to obtain from the MBA
education.
2. A consensus - strategic statement which represents three or less primary goals of stu-
dents is crafted (30 minutes).
3. The goals will serve as the strategy statement for the remainder of the exercise.
4. The class is divides into trios.
5. Each trio is assigned the following task:
a. Students interview each other about shortfalls they see in achieving student
aspirations for the MBA program and the barriers they see to their achievement
(30 minutes).
b. Groups diagnose the root causes for the success or failure of the MBA program
in achieving strategic goals (45 minutes).
6. Groups report their fi ndings.
Develop a change plan that will align the MBA program with
strategic goals articulated in the first exercise
1. Class is divided into trios.
2. Groups discuss success or failure of change efforts each person experienced in their
previous job. Each student presents a success or failure and ties it to the principles
discussed in this chapter (30 minutes).
3. Each group decides on what must change in the MBA program in order to achieve
strategic goals developed in the fi rst exercise (30 minutes).
4. Each group arrives at barriers to change they anticipate (20 minutes).
5. Each group develops recommendations for a change strategy the dean should
employ (30 minutes).
6. Group reports: what are the barriers to change and their implications for leading
change in the MBA program (30 minutes)?
7. Instructor leads a discussion of reports.
c29.indd Sec2:556 6/17/09 3:23:25 PM
c30.indd 557 6/17/09 7:06:18 PM
Part VIII
ENTREPRENEURSHIP
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30
Gain Entrepreneurship Success
through Swiftness and
Experimentation
J. ROBERT BAUM
THE PRINCIPLES
Entrepreneurs face higher uncertainty, risk, and barriers to market entry than established
businesses. Risk is high because entrepreneurs typically introduce new products, new
processes, and/or new business models. Little market information is available, and prod-
ucts or processes may be untested. However, the reward for being first to serve a market
niche or for establishing a learning site in new market territory can be astounding. Sergey
Brin, Larry Page, Steven Jobs, Oprah Winfrey, Bill Gates, and Michael Dell survived
resource shortages, failed products, skeptics, and production challenges to make a positive
difference for all of us – and for themselves. They did it, in part, through rapid introduc-
tion and continuous improvement of new products, services, and business types. Thus, I
explain and promote two key entrepreneurship principles: gain entrepreneurship success through
swiftness and experimentation.
Swiftness and experimentation are demonstrated predictors of venture success (Baum
and Bird, in press). In 1996, Sergy Brin and Larry Page, founders of Google, needed com-
puting capacity to continue experimentation with their latest search engine. Instead of
waiting to acquire enough money to purchase a large server, they quickly moved through
an eight iteration experiment and found a way to link multiple borrowed servers together
to create a network of inexpensive PCs. This pattern of swiftness through rapid experi-
mentation was repeated as they: (1) acquired a terabyte of discs and built their own com-
puters in their dorm room, (2) negotiated with their first $ 100,000 investor for only fi ve
minutes, and (3) “ . . . in short order, . . . introduced improved posting, post removal, and
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560 J. ROBERT BAUM
threading of the 500 million - plus messages exchanged . . . ” (pp. 5 of 22: www.google.com/
corporate/history.html ).
Obviously, Google ’s founders were skilled programmers with good ideas, but this is
not sufficient to build a successful new business. I focus on successful exploitation of good
ideas. Over time, successful entrepreneurs modify their initial vision, initial plans, and
products to fit their improved understanding of the market. In this chapter, I prescribe
swiftness and experimentation as the best way to adapt to shifting market demands; swift-
ness and experimentation involve intense initial market monitoring, rapid variation, fast
reintroduction, and follow - up monitoring. Swift entrepreneurial action is apparent when
entrepreneurs move from step to step during their problem solving and opportunity taking
without delay between steps and with fast paced thinking and action. Swift actors reach
conclusions and accomplishments surprisingly fast.
As shown in the Figure 30.1 , I review the important factors that affect swiftness and
experimentation and focus on four that have demonstrated signifi cant relationships with
successful entrepreneurial behavior and subsequent venture success: creativity, tenacity,
entrepreneurial self - efficacy, and goal setting. I elaborate the explanation of entrepreneur-
ial self - efficacy by explaining the two types of experience that have the greatest impact on
improved entrepreneurial self - efficacy, and I describe ways to enhance creativity, goal set-
ting, swiftness, and experimentation.
I begin with a review of the importance of entrepreneurship and explain what schol-
ars mean when they refer to “ entrepreneur ” and “ entrepreneurship. ” I follow with an
explanation of the unique and extremely important context that surrounds entrepreneur-
ial behavior. The context helps us understand the types of factors that enable and moti-
vate entrepreneurs to enact successful behaviors such as swiftness and experimentation.
I describe swiftness and experimentation and explore factors that increase thinking and
Enhance the Determining Principles: Moderators: Ultimate Goal:
Determining Factors:
Factors with:
Successful
Entrepreneurship
Swiftness
Experimentation
Industry
Dynamism
Regional
Munificence
Organization
Resources
Venture
Experience
Related
Industry
Experience
Involvement
w/Experts
Creativity
Enhancement
Programs
Goal-setting
Enhancement
Programs
Creativity
Tenacity
Entrepreneurial
Self-Efficacy
Goal Setting
FIGURE 30.1 Gain entrepreneurship success through swiftness and experimentation
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GAIN ENTREPRENEURSHIP SUCCESS THROUGH SWIFTNESS AND EXPERIMENTATION 561
acting speed and inspire an effective and continuous search for improved products, processes,
and business models.
THE IMPORTANCE OF ENTREPRENEURSHIP
Successful entrepreneurship is important because it creates wealth through conver-
sion of technological and organizational innovation into valued products and services
(Schumpeter, 1934 ). It also motivates established competitors to improve their products
and processes. The Organization for Economic Cooperation and Development (OECD)
stated that “ Entrepreneurship is central to the functioning of market economies. ” The US
Small Business Administration went even further to declare, “ . . . the crucial barometer
of economic freedom and well - being is the continued creation of new and small fi rms in
all sectors of the economy by all segments of society. ”
Brin, Page, Jobs, Winfrey, Gates, and Dell are “ ideal type ” entrepreneurs; they built
large well - known organizations that have enhanced our lives. Their companies are big now,
but once they were only small new ventures. Indeed, most founders establish ventures that
continue as small businesses for life. But even these new permanently small businesses are
a major economic force. Taken together, US firms with fewer than 500 employees account
for 51% of private sector output, employ 51% of private sector workers, and constitute
99% of all employers.
In summary, those who found and operate new successful ventures and new small busi-
nesses are important in terms of their impact upon absolute GNP and employment and
their potential for social and economic impact. Indeed, entrepreneurship through establish-
ment of new independent businesses was so successful in the US during the 1980s and
1990s in creating new jobs that it overcame the elimination of over 5 million jobs in estab-
lished big business (Kirchhoff, 1997 ). On the other hand, over 50% of new ventures fail
within five years in the US (Aldrich, 1999 ); thus, it is important to understand the factors
that infl uence new venture creation and growth.
ENTREPRENEURS AND ENTREPRENEURSHIP DESCRIBED
Hundreds of conceptions – “ entrepreneur, ” “ entrepreneurship, ” and “ entrepreneurial ” –
exist. These include “ successful small businesspersons, ” “ retired founders, ” “ failed found-
ers,” and “ managers.” To avoid confusion about what I mean by entrepreneur and to
avoid a discussion about “ who is an entrepreneur, ” I focus on early stage entrepreneurs
who intend to make a significant difference in people ’s lives – entrepreneurs with big
dreams and high potential. No studies that included the solitary self - employed or small
business managers were used. The people who start these high potential high growth com-
panies are involved in a process of discovery, evaluation, and exploitation of opportunities
that will introduce new products, services, processes, ways of organizing, or markets ”
( Venkataraman, 1997 ).
There are many indicators of venture success (entrepreneur ’s personal satisfaction,
rates of commercialized innovation, rates of improvement in market effi ciency, etc.); how-
ever, venture growth is the best general indicator of entrepreneurship success because
venture growth reflects personal and market gains (Kirzner, 1985 ). Venture growth is a
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562 J. ROBERT BAUM
measurable and well - understood entrepreneurship goal. Covin and Slevin ( 1997 ) explain
that venture growth is the essence of entrepreneurship.
The entrepreneurship process begins with exploration for ideas and proceeds through
opportunity evaluation and recognition to start - up. Start - up is followed by emergence
(revenues and employees), and, finally, early stage growth. Although the principles
described in this chapter apply in all venture stages, the research findings that I draw
upon are based upon studies of early stage companies that were founded with plans for
major growth. Early stage growth was taken as the best predictor of ultimate success.
Experimentation and swiftness are also important during exploration, opportunity
recognition and evaluation, start - up, and emergence. Furthermore, the conclusions that
are drawn herein about behaviours that impact venture success may also apply to ambi-
tious managers everywhere.
The entrepreneurship context
Entrepreneurs face extreme situations because their work involves disruptive change. They
create new markets where none existed and enter established markets with new products.
Sometimes they displace other companies and employees, so their gains may create losses
for others. Obviously, aggressive competitive challengers may appear. Little or no infor-
mation is usually available to guide entrepreneurs ’ expectations about new marketing and
organizational outcomes, and products may be introduced with limited market trials in
attempts to stay ahead of competitors. Unless intellectual property is protected, competi-
tive advantages may be temporary as competitors with valuable substitutes emerge.
Few entrepreneurs have suffi cient financial resources to acquire complete facilities,
process systems, equipment, and professional talent; and few can support start - up losses
alone. The financing challenge is heightened in rapidly growing new ventures as invest-
ment demands accelerate and cash dwindles. Entrepreneurs are frequently forced to
accept capital from financiers who negotiate from aggressive and powerful positions and
who minimize their investors ’ risk by setting high goals for the entrepreneurs and offering
just - in - time cash. Thus, entrepreneurs who manage high potential start - ups with outside
financing confront a threatening array of continuous demands for high performance, and
they experience a continuous and stressful sense of urgency as they worry about survival
(Smith and Smith, 2000 ).
Thus, starting, running, and making a successful business is usually a very diffi cult
undertaking. There are many tasks involved. For example, formulating the basic vision,
finding investors, hiring competent people, finding a suitable location, making the prod-
uct, finding customers, building a sales force, beating out competitors, dealing with law-
suits and government regulations, and overcoming setbacks at every phase.
In summary, high growth entrepreneurs function in the midst of high uncertainty,
urgency, surprise, complexity, personal risk, and resource scarcity (Baum, Frese, Baron, and
Katz, 2006; Smith and Smith, 2000 ). High speed continuous improvements are required
to replace continuous erosion of competitive advantages (Baum et al., 2006; Eisenhardt,
1989 ). High uncertainty increases the value of fast decision making and fast action, and
minimal resources drive entrepreneurs to experiment with vigilant monitoring and con-
tinuous adaptation to gain and maintain competitive advantages. Entrepreneurship is not
a career for the fainthearted.
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GAIN ENTREPRENEURSHIP SUCCESS THROUGH SWIFTNESS AND EXPERIMENTATION 563
SWIFTNESS – PRINCIPLE 1
Swiftness is beneficial for high growth entrepreneurs because they gain little by waiting.
High growth entrepreneurs face new or immature markets with scant existing infor-
mation, so the only way to get market information is through entry. Market acceptance or
rejection is full of important information, and it speeds the search for the right products,
services, markets, and organization forms ahead of competitors.
So the principle offered here is based on the simple question, “ Why wait for certainty
when it does not exist when you start something new? ” Why not act quickly to uncover
potential markets? Taken together, it is not surprising that experienced entrepreneurs
advise, “ Just start, move quickly, and watch the unfolding action for answers and oppor-
tunities ” ( Jones, 1993 , p. 110).
In other words, early action can generate information, dynamic learning, and knowledge
ahead of rivals. Unexpected opportunities sometimes emerge but only if action is started.
Swiftness increases the number of trials that can be attempted within time and resource
constraints, thereby providing more information and narrowed confi dence intervals.
Swiftness has appeared as a prescription and organizational competency in studies of
product development projects (Eisenhardt and Tabrizi, 1995 ), global competition (Stalk
and Hout, 1990 ), and successful competitive actions (Ferrier, Smith, and Grimm, 1999 ).
Fast decisions, which lead to swiftness, have related positively with firm performance in
new industries (Eisenhardt, 1989 ) and in new ventures in mature industries (Baum and
Wally, 2003 ).
EXPERIMENTATION – PRINCIPLE 2
“ Experimentation ” involves repeatedly conducting trials or tests to discover something that
is not known. It involves continuous searches for betterment with repeated goal - driven revision (Thomke,
2003 ). Particularly, in the new venture context, experimentation appears as actions toward
goals that will involve new (or better) products, services, processes, or organizations.
Experimentation connotes use of a conceptual model and controls across the trials in con-
trast with “ trial and error ” which reflects a more random set of variables for each trial.
Both experimentation and trial and error suggest repeated cycles of action with monitor-
ing and revision or reformulation.
Other concepts are related to experimentation, and understanding their characteristics
may help us grasp the meaning and usefulness of experimentation for entrepreneurs. For
example, improvisation is extemporaneous composition and execution of novel actions
(Miner, Bassoff, and Moorman, 2001 ). Monitoring and revision are not included in con-
ceptions of improvisation; however, follow - up is implicit because improvisation is short -
term, real - time learning.
“ Bricolage ” is similar to improvisation but with resources strictly limited to those that
are “ available ” (Baker, Miner, and Eesley, 2003 ). Some studies of improvisation have
focused on resource conditions, suggesting that improvisation occurs only with resources
in hand (e.g. in the style of improv theatre); however, most do not imply resource con-
straints. “ Flexibility ” and “ adaptation ” are more general “ change behaviors ” that are
triggered by changed “ situations. ”
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564 J. ROBERT BAUM
The entire set of change behaviors is most useful for information gathering, learning,
resource conservation, and opportunity taking when follow - up involves close monitoring
of responses from markets, employees, and stakeholders. It is important to control the
unfolding action and reformulation or revision so that the experimenting entrepreneur
can know which, among many possible variations, is working and which are not working.
Experimentation is useful for high growth entrepreneurs, because it reveals information
about potential markets where no markets exist. Experimentation reveals customer reac-
tions to disruptive product, service, and business model introductions in existing markets
(Bhide, 2000 , p. 60), and it may enable recovery from poor past decisions or missed oppor-
tunities. Experimentation exposes competitors ’ “ barriers to entry ” and guides the rapid
changes that are required (Smith and Smith, 2000 ); it may also expose opportunities to
build new products or offer new services. Thus, the fast - moving unresolved markets that
entrepreneurs face and their inability to get “ hard ” information to guide foresight require
experimentation.
Recent research about entrepreneurs indicates that successful entrepreneurs are com-
fortable enacting changes to cope with processes, products, or markets that do not meet
their goals (Baum and Bird, in press). Miner et al. ( 2001 ) and Hmieleski and Corbett
( 2006 ) found that entrepreneurial behaviors related to experimentation (improvisation and
trial and error) are used by entrepreneurs to deal successfully with their changing urgent
situations, and Eisenhart (1989) observed “ unintended trial actions ” among the success-
ful entrepreneurs whom she studied. Thus, past research findings and evaluation of the
HGEs ’ situation point to the value of experimentation for new venture growth.
DETERMINING FACTORS
There are many important factors that inspire and enable swiftness and experimentation.
I focus on creativity, tenacity, self - efficacy, and goal setting as primary predictors because
each has been consistently important across entrepreneurship studies.
Creativity
Creativity is intellectual inventiveness. It is the ability to generate high quality novel ideas
that meet the needs of a task or context. Those who have high creativity challenge the
status quo and seek alternative ways to solve problems and gain advantage from oppor-
tunities. Creativity is a stereotypical trait of entrepreneurs, the movers and shakers behind
creative destruction (Schumpeter, 1934 ). Those entrepreneurs who do not have creativity
must look elsewhere for innovations by partnering with an inventor or developer through
licensing or joint venturing. Of course, some entrepreneurs simply copy the basic ideas of
others, like discount retailer Sam Walton, and express their creativity through innovative
execution of the idea.
High growth entrepreneurs need creativity to commercialize their products and service
their customers successfully because creativity enables option generation. Those who are
creative enough to envision multiple novel paths to get their products to market and who
are sufficiently creative to envision the multiple outcomes from each path are advantaged
because they can conduct multiple market experiments. Similarly, high creativity speeds
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GAIN ENTREPRENEURSHIP SUCCESS THROUGH SWIFTNESS AND EXPERIMENTATION 565
the conception and description of variant paths which may speed market trials. Thus, creativ-
ity may enable entrepreneurs who are more creative to avoid delays as they search for options.
Sometimes, option generation is urgent. Surprise barriers to success emerge, and high
creativity entrepreneurs are better able to quickly see novel ways to solution. For example,
in Sam Walton’s early years, he was surprised at the ability of competitors to retain their
customers – even though they charged more for their goods than he charged. In a fl ash of
creativity – and action over two days – he conceived, designed, selected, and began work
on his first store. It was to be located in a small community where existing competition
was weak, and it was supposed to be very large with broad and deep stocks of general
merchandise and with costs so low that customers would travel from a large region to shop
(Huey and Walton, 1992 ).
I have discussed the importance of creativity for option generation during market entry.
Entrepreneurs also need creativity during the idea - getting and opportunity recognition stages,
but I have not focused on these stages. Nevertheless, entrepreneurs who can quickly envision
a whole set of market options and outcomes have a competitive advantage at all stages.
Tenacity
Tenacity, or perseverance, is a trait that involves sustaining goal - directed action and energy
even when faced with obstacles. Tenacious people do not give up when things go wrong.
Tenacity has been identified consistently as an archetypical entrepreneurship trait
because the business start - up process involves confrontation of formidable barriers to
market entry. Research points to one trait above others that sets the successful apart from
failures. They did not give up when things went wrong. They were tenacious (Gartner,
Gatewood, and Shaver, 1991 ).
Tenacity is important for high growth entrepreneurs because they must be able to
conduct extensive, even continuous, experiments. They must persist with their search
for options and solutions and continue market monitoring after they institute trials.
Monitoring must persist following revision of products and services.
Nearly all entrepreneurs at some point in their careers confront difficult obstacles (e.g.
barriers to entry) or have setbacks (e.g. a product that does not work as planned, cost over-
runs). Some will even fail completely (and have to start over). If making a new business
succeed or making an existing business grow were easy, then almost anyone would be able
to do it. But, only a relatively small number of people are successful entrepreneurs. Shaver
and Scott ( 1991 ) note that successful entrepreneurs pick themselves up after failure, in
part because they attribute failure to bad luck or insufficient effort on their part. They
assume that if they work harder, they will succeed. In a study of 217 inventors, those who
had a higher adversity quotient (able to recover from bad news) founded more businesses
(Markman, Balkin, and Baron, 2002 ). Baum, Locke, and Smith ( 2001 ) found that the trait
of tenacity contributed to venture growth even with a six - year time lag between the meas-
urement of the trait and subsequent performance.
There are many examples of tenacity among entrepreneurs. FedEx was on the verge
of bankruptcy for three years until Fred Smith made it work. Mary Kay Ash staggered
through the death of two husbands, the failure of her first beauty show, and a disastrous
sales decline before making her beauty products company a huge international success. It
took Bill Gates and Microsoft seven years to develop a viable Windows operating system.
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566 J. ROBERT BAUM
Sam Walton failed with a drug chain, a home improvement center, two hypermarts,
and some disastrous store openings, but he made it big in the end with Wal - Mart ’s mag-
net stores in low competition locations.
It can be asked: where does a successful entrepreneur draw the line between produc-
tive tenacity and foolish persistence (Locke, 2000 )? Sometimes it is hard to tell until after
the fact, especially in the case of an entirely new product, but one common type of foolish
persistence is to stick to a strategy that worked in the past, even in the face of mounting
evidence that the competitive environment is radically changing. Consider Henry Ford’s
refusal to abandon the Model T – which had been a best selling car for 19 years – in the
face of threats from General Motors. By the time Ford developed new models, GM had
snatched away Ford’s position as the number one car company in the world – a position
which Ford never regained. One guideline then is that an entrepreneur should keep close
tabs on the outside world when deciding whether or not to retain or abandon a strategy
or product. If the product is totally new, the entrepreneur has to decide if there is enough
cash fl ow to keep the project going (Locke and Baum, 2007 ).
In summary, tenacity is important for experimentation and venture success because
entrepreneurs who hold stubbornly to their goals and who hate to give up increase their
chances of finding the solution for a market need. Baum et al. ( 2001 ) found that tenacity
was the most powerful trait predictor of new venture growth.
Entrepreneurial self - efficacy
It is not enough for entrepreneurs to be creative and tenacious; they must also be confi -
dent that they have everything that they need to perform a task. Confidence is refl ected in
“ self - effi cacy, ” the belief or degree of confidence that someone has the ability to success-
fully perform a task (see Chapter 10 , this volume). Bandura ( 1997 ) and a subsequent meta
analyses by Judge and Bono ( 2001 ) point to the central role of self - efficacy in causing high
performance through its impact on motivation; Stajkovic and Luthans ( 1998 ) explained
that self - effi cacy enhances focus, direction, persistence, and intensity of action.
Without self - efficacy, little will happen. I point to high self - efficacy as a factor that
enhances experimentation and swiftness because both behaviors will only occur when entre-
preneurs are suffi ciently confident that they can move quickly and successfully. When
entrepreneurs have confidence, they can, with sufficient trials, find market acceptance.
Entrepreneurship researchers have quantitative evidence that general self - effi cacy pre-
dicts new venture creation (Markman et al., 2002) and venture growth (Baum and Locke,
2004 ). Chandler and Jansen ( 1992 ) found a significant relationship between general self -
confi dence (measured to yield self - effi cacy) and early stage venture performance.
Self - confi dence specifically about entrepreneurship was studied by Chen, Green, and
Crick ( 1998 ). The authors defined entrepreneurial self - efficacy (ESE) as “ the strength of a
person’s belief that he or she is capable of successfully performing the various roles and tasks
of entrepreneurship. ” It consisted of five factors: innovation, risk taking, marketing, man-
agement, and financial control. Higher ESE distinguished entrepreneurs from managers.
Similarly, higher ESE predicted higher “ experimentation ” and higher “ swiftness ” in a
recent empirical study (Baum and Bird, in press). Thus, I employ it here as an impor-
tant factor that impacts the principle studied: gain entrepreneurship success through swiftness and
experimentation.
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GAIN ENTREPRENEURSHIP SUCCESS THROUGH SWIFTNESS AND EXPERIMENTATION 567
Goal setting
Goal - setting theory (Locke and Latham, 2002 ) has shown that specifi c, difficult goals lead
consistently to higher performance than vague and/or easy goals. Goal setting works most
effectively when people are committed to their goals and have feedback regarding their
progress in relation to their goals (see Chapter 9 , this volume).
No other theory of motivation has deeper or broader empirical support at the indi-
vidual, group, and unit level (Landy and Becker, 1987 ; Locke and Latham, 1990 , 2002 ).
Entrepreneurship theorists cite goals as an important factor in venture growth (Covin and
Slevin, 1997 ) and new venture survival (Carsrud and Krueger, 1995 ). An empirical study
of the effects of entrepreneurs ’ characteristics found that goals had a direct effect on
firm growth over six years (Baum and Locke, 2004 ). In another study Tracy, Locke, and
Renard ( 1999 ) found significant relationships between the financial, growth, and inno-
vation goals of entrepreneurs in the printing business and corresponding performance
measures obtained two years later.
I employ goal setting here as a predictor of entrepreneurs ’ swiftness and experimen-
tation because goals help motivate people to use suitable task strategies or to search for
suitable strategies, if they lack the knowledge they need. Swiftness and experimentation are
suitable strategies for the entrepreneurship context wherein uncertainty is high because new
markets and products are untested. Sufficient information is not available to reduce uncer-
tainty about market performance or financial returns, so those who set specifi c, diffi cult
growth goals choose strategies and related behaviors that yield more information faster.
CEO goal setting is an ideal practice in new ventures because CEOs in small fi rms
have relatively direct control over the actions that lead to goal accomplishment. In larger
more established firms, there are more layers and most work is delegated. Furthermore,
firm strategies in large organizations may be more complex than those in smaller com-
panies and, thus, more prone to error. Complex strategies are also less easily and less rapidly
changed when problems occur and decision makers may not have the knowledge required
to achieve the goals. In summary, entrepreneurial goal setting in the new venture setting
provides a potent competitive advantage, compared with the effects in larger established
companies, because it directly inspires the entrepreneur ’s swiftness and experimentation.
MODERATING FACTORS
There are many organization characteristics (e.g. structure and size) and external con-
ditions (e.g. industry, economic conditions, and zeitgeist) that impact successful new
venture creation (Baum et al., 2001 ; Rauch and Frese, 2000 ). I point particularly to
industry dynamism, regional munificence, and organization resources because in mul-
tiple research studies they have interacted most strongly with entrepreneurs ’ behavior to
affect venture success (Baum and Wally, 2003 ; Covin and Slevin, 1997 ).
Industry dynamism
Dynamism (instability or turbulence) refers to the level of environmental predictability ; it
is manifested in the variance in the rate of market and industry change and the level of
uncertainty about forces that are beyond the control of individual businesses. Dynamism
c30.indd 568 6/17/09 7:06:20 PM
568 J. ROBERT BAUM
creates competitive advantages for entrepreneurs because new ventures are typically
more nimble (responsive) than big companies. In contrast, dynamic markets challenge
large cumbersome companies when product revision is required – and product revision is
almost always a characteristic of dynamic industries. Indeed, Eisenhardt ( 1989 ) and Judge
and Miller ( 1991 ) found that fast - paced settings with rapid changes in demand and discon-
tinuous outcomes motivated fast decision making and action and yielded profits for those
who were able to respond. Thus, dynamism enhances (moderate positively) the effects of
swiftness and experimentation.
Many dynamic markets are caused by new technologies (Eisenhardt and Tabrizi, 1995 ),
and many high growth entrepreneurs are leading technology innovators. Although some
second - movers gain competitive advantage by quickly copying the first mover, most tech-
nology entrepreneurs count first - mover advantages as more important for success (Ferrier
et al., 1999). Thus, technology entrepreneurs need to master fast decision making and
swiftness to capture fleeting advantages. Furthermore, if information is scarce, resource -
poor entrepreneurs are not disadvantaged because rich established competitors cannot
gain information by outspending the upstarts.
In contrast, dynamism has been cited as a challenge for entrepreneurs because it
increases the difficulty of understanding supplier and customer markets (Priem, Rasheed,
and Kotulic, 1995 ). Valuation of strategic options is difficult because there are many
options with low probabilities, and risk is high because suffi cient resources are required
to sustain firms during the downside of large operating variances (Bourgeois, 1980 ).
Nevertheless, most entrepreneurs claim that they can beat larger established companies in
dynamic markets (Eisenhart and Tabrizi, 1995).
Some have suggested that swift is not better, and this may be true in some cases; how-
ever, in dynamic situations, Eisenhardt ( 1989 ) found that fast decision makers were also
more comprehensive and more successful. Some unsuccessful entrepreneurs lurch quickly
from one bad idea to another, so I emphasize that decisions, even when swift, should be
based on reason and reality. Decisions should be the result of thought, not change for the
sake of change.
Regional munificence
Regional munificence (capacity) refers to the local environment ’s support for organiz-
ational growth. In established industries, it is manifested in high industry sales growth (Dess
and Beard, 1984 ). Munificent environments provide a reserve against competitive and
environmental threats through availability of suffi cient financing, intellectual support from
institutions, and developed human resource markets. Both new ventures and larger com-
petitors benefit from environmental munificence. For example, the availability of fi nanc-
ing and skilled labor is good for both.
However, one can argue that munificent environments diminish the value of new ven-
tures ’ experimental behavior, causing a negative interaction between experimentation and
entrepreneurship success. To explain, a benefit of experimentation is that minimal fi nan-
cial resources are applied in each trial. Most new high growth ventures cannot obtain suf-
fi cient financial support, so experimentation is a mandate. However, if the region is rich
in financial resources it may be better for a new venture to gain market information by
financing entrance to multiple markets with multiple products simultaneously. Despite
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GAIN ENTREPRENEURSHIP SUCCESS THROUGH SWIFTNESS AND EXPERIMENTATION 569
conflicting theories about the effects of munificence, Baum and Bird (in press) found that
regional munificence enhanced the interaction between rapid change behaviors and new
venture growth in the graphics industry.
In light of the competing effects of munificence, I suggest that entrepreneurs evaluate
the region and the nature of competition in the industry to be clear about the value of
experimentation in high munifi cence regions.
Organization resources
Whereas dynamism and munificence are industry forces that have different effects when
they interact with entrepreneurial behavior, high organization resources are almost always
beneficial (Baum and Bird, in press; Smith and Smith, 2000 ). In short, the greater the
internal resources of a venture, the greater the benefi t from positive entrepreneurial
behavior. For example, rich organization resources such as financing and human resources
enable higher growth without money worries and enable management growth without
hiring challenges. For example, after Sam Walton saved sufficient money from his fi rst six
years of operations, he was able to experiment more freely with different practices and
promotions (Huey and Walton, 1992 ). When these worked in his experimental store, he
replicated the practice in his two other stores. A well - financed venture is nearly always
better off than its poor cousin. Similarly, a well - staffed venture is nearly always better off
than an understaffed venture (Stevenson, 1985 ). Nevertheless, there is anecdotal evidence
of negative effects of excess resources. For example, IBM had many programmers and
Microsoft had few when they worked jointly, but the Microsoft programmers were more
effective than the IBM programmers because they worked more efficiently and designed
with cost minimization in mind.
Industry forces and organizational forces are important, but entrepreneurship is funda-
mentally personal. It takes human vision, intention, and work to conceive and convert business
ideas to successful products and services. Through their thinking and action, entrepreneurs
themselves integrate human and financial resources to organize, produce, and market prod-
ucts and services that yield value for customers and workers. According to venture fi nanciers,
entrepreneurs ’ personal characteristics (individual differences) are the most important fac-
tors for business success – even more important than the business idea or industry setting
(Shepherd, 1999 ; Zopounidis, 1994 ). Thus, external forces amplify the effects of entrepre-
neurial behavior, but good entrepreneurial behavior is a first order condition.
IMPLEMENTATION
High levels of creativity, tenacity, entrepreneurial self - efficacy, and goal setting enable and
motivate swiftness and experimentation which, in turn, yield high venture growth. But,
how can an entrepreneur – or wannabe entrepreneur – gain creativity, tenacity, self - effi cacy,
and goal setting? I explore the possibilities and offer suggestions. This brief treatment of
learning opportunities points to the importance of venture and industry experience, as
well as the value of building relationships with expert models. It also suggests that creativity -
building and goal - setting educational programs may enhance one ’s creativity and inclination
to set effective goals.
c30.indd 570 6/17/09 7:06:20 PM
570 J. ROBERT BAUM
I address the value of venture and industry experience primarily for improvement of
entrepreneurial self - effi cacy; however, relevant experience can also expose wannabe entre-
preneurs to leaders/entrepreneurs who are models of tenacious behavior and goal setting.
Ideally, wannabe entrepreneurs should work for a new venture or entrepreneurial com-
pany, and they should focus on the pace and process of product and service development.
Those fortunate enough to work with an entrepreneur in the industry of their choice may
also gain from industry creativity programs and cultures. Indeed, consider the prolifer-
ation of successful new ventures in communities such as Silicon Valley and the Boston
technology crescent. Concentrated industry communities offer relevant opportunities for
learning from others, and this condition should fi gure in career choice.
Improving your creativity
Creativity is often described as a trait – a human characteristic that is inherent and stable.
However, hundreds of psychology professionals promote their creativity education pro-
grams at company sponsored seminars and trade shows based upon evidence that creativ-
ity has been enhanced with training (Runco, Plucker, and Lim, 2000). Most professionals
employ group exercises involving analogies, brainstorming, cross - fertilization, devil ’s advo-
cacy, lateral thinking, or vertical thinking. I think that most wannabe entrepreneurs should
engage with these programs because they offer hope for improving personal creativ-
ity. Some lessons learned in group sessions can translate to solitary thinking, and solitary
thinking is the mode for entrepreneurs. In particular, a focus on the creative process and
practices such as divergent thinking appear to improve creativity in high uncertainty set-
tings (Mumford, Supinski, Baughman, Constanza, and Threlfall, 1997 ).
Relevant experience enhances creative processes such as brainstorming (even at a per-
sonal level). For example, Angel Johnson Organics (AJO), an early marketer of organic
foods, was unsuccessful in placing products in established supermarkets. A creative AJO
marketing manager who had worked for Honest Tea, a sugar- free iced tea manufacturer,
noticed the success that Honest Tea had in health - oriented institutions such as gymnasiums
and hospital facilities. After a brainstorming session with her sales, marketing, and oper-
ations staff, she developed a refrigerated display cabinet that enabled the successful intro-
duction of her organic fruit and vegetable products to health - oriented institutions. Success
led to a joint venture with Honest Tea and subsequent placement of AJO and Honest Tea
products in established supermarkets. Thus, I prescribe industry experience to enhance
creative thinking processes that focus on generating product and marketing options.
Improving your tenacity
Tenacity is a trait, a predisposition. It is far more difficult to change traits such as tenac-
ity or perseverance through training or experience than to change behavior. (Of course,
behavior itself is hard to change.) However, extended exposure to successful others who
are tenacious may raise a person’s intention to be more tenacious (Bhide, 2000 ). Also,
motivation through goal setting, external rewards, and punishment may inspire tenacity
(Locke and Latham, 1990 ). Locke and Latham also explain that self - effi cacy, which can be
acquired, may increase tenacity.
c30.indd 571 6/17/09 7:06:21 PM
GAIN ENTREPRENEURSHIP SUCCESS THROUGH SWIFTNESS AND EXPERIMENTATION 571
Improving your entrepreneurial self - efficacy
Self - effi cacy reflects past experience and attainment, but more importantly, the conclusion
one has drawn about one ’s capacity for performance attainment from past experiences.
Entrepreneurs can improve their entrepreneurial self - efficacy by gaining relevant experience.
Often entrepreneurial self - efficacy is developed from childhood experiences in which
one undertakes independent projects (e.g. running a paper route, building a computer and
selling it), masters difficulties, and succeeds. Confidence may also stem from one ’ s aware-
ness of one ’s own cognitive abilities.
Entrepreneurs ’ most valuable experiences are related to time spent starting a new com-
pany or with others who start new companies. The new venture situation is dominated
by newness; however, all is not totally new. Some decision processes, resource aggregation
activities, customer fulfillment conditions, and market characteristics appear and reappear.
Through prior venture experience, entrepreneurs ’ mental structures about new venture
processes are continuously used, revised, and reused. Indeed, multiple entrepreneurship
researchers have found significant positive relationships between “ habitual ” or repeat
entrepreneurs and venture start - up and growth (Davidsson and Honig, 2002 ).
The second important type of experience for developing entrepreneurial self - effi cacy is
industry experience. Herron and Robinson ( 1993 ) posit that industry knowledge and related
industry networks are important assets in specifying the new venture ’s need for resources,
finding those resources, selecting partners, and structuring more fl exible resource con-
tracts. Herron and Robinson ( 1993 ) found that 15% of new venture performance variance
was accounted for in terms of the entrepreneur ’s technical industry experience. Financiers
also point to specific career experience as most important for predicting entrepreneurs ’
job performance. Indeed, venture capitalists note that industry and technology experi-
ence, when related with the products, processes, or business models proposed for fi nancing,
are among the most important personal characteristics of the entrepreneur (Smith and
Smith, 2000).
Improving your goal setting
Chapter 9 of this volume explains that personal and employee performance can be
improved through goal setting. Goal setting motivates entrepreneurial behavior, so it
improves the pace of action and the rate of experimentation in new ventures. Those who
aspire to venture success should devote their time, money, and other resources to personal
and organizational goal setting.
In the early growth stages of a new venture, goal setting may be highly personal. The
solitary entrepreneur who maintains a timeline with goals will have an important tool for
personal motivation and for attraction of financial and human resources. Such a formal
written timeline should include benchmarks such as: complete prototype, obtain patent
or copyright, sell first unit, employ operations manager, attain $ 300,000 annual revenue
rate, cash breakeven, profitable, etc. As the venture team is formed, the goals/timeline
should be formalized, communicated, and updated to include team members ’ views about
important indicators of success and the appropriate levels of the indicators.
It is important to develop compensation schemes that motivate team members on the
basis of performance goals. These may include cash awards, stock options, and non - cash
c30.indd 572 6/17/09 7:06:21 PM
572 J. ROBERT BAUM
rewards. Incentive practices are addressed in Chapter 12 of this volume. In particular,
goal - based pay for performance, including the entrepreneur ’s own compensation, is
important. As the organization develops, the range of goals should be expanded to include
product improvement (pace of innovation and level of product and market experimenta-
tion), product quality, and market penetration. Similarly, the range of goal - based rewards
should be expanded to include recognition and increased non - cash benefits, and regular
team/employee sessions should address employee knowledge about goals and associated
rewards.
Again, wannabe entrepreneurs may gain knowledge about goal setting through rele-
vant venture and industry experience. Management by objective (MBO) seminars are based in
goal theory, and they offer guidance about the types of goals and rewards that are most
effective. I recommend exposure to these programs and emphasize that specifi c challeng-
ing goals are effective for personal and venture success through all levels of the new ven-
ture and through all stages of new venture creation.
Note that early MBO programs failed because managers set their own goals and were
judged only on goal success, so they set easy goals to be sure of personal success while
their firms often failed. To prevent this, goals below the CEO level must be assigned and/
or stretch (very hard) goals should be encouraged with the proviso that goal failure will not
be punished as long as the manager has made a creative effort to improve. At GE, Jack
Welch set minimum goals which were mandatory and also stretch goals which were meant
to encourage innovation but did not have to be met on a regular basis.
EXCEPTIONS
Swiftness is usually better than slow action because more work is accomplished, more value
is added, and learning opportunities appear in advance of competitor ’ s learning. However,
even high growth entrepreneurs have periods when urgency is not great – when sufficient
time and resources are available for a thorough and comprehensive information search
and analysis, and swiftness is not important. So it may be all right to pause, but realize that
downtime can be used (1) to gain advance learning about how to find the needed explicit
information or (2) to find the best way to conduct the evaluation of new ideas.
CASE EXAMPLES
Lad and Hooker Beer
Brothers Hans and Heinrich Stolzfus experimented with beer making when they were
teenagers. Despite their parents ’ concern and complaints, they secretly brewed small
batches and sold it to friends. Their circle of friends grew, and their passion for beer mak-
ing was carried to UCLA in 1996. Hans was admitted to the Liberal Arts program and
Heinrich entered the Business School. The brothers set up a small propane brew pot in
their dorm room and sold ice cold home brew privately to their classmates. Their beer
was good and within one semester their volume had grown beyond their wildest dreams.
At the end of 1998, the brothers were brewing a keg a day and the activity attracted
unwanted institutional attention.
c30.indd 573 6/17/09 7:06:21 PM
GAIN ENTREPRENEURSHIP SUCCESS THROUGH SWIFTNESS AND EXPERIMENTATION 573
Hans moved quickly to rent a garage in Culver City and began to brew larger quanti-
ties. He successfully obtained a license to make and distribute limited quantities of the
home brew. Hans entered the brothers ’ beer in the Great American Beer Festival and
won a gold medal. Upon graduation, Heinrich joined his brother. Heinrich believed that
they could expand the operation, so they borrowed $ 100,000 through an SBA loan guar-
anteed by their parents. The beer began to attract public attention because the broth-
ers established a social mission connection. They donated $ 2 to California ’s Safe Driver
Foundation for every keg sold. This experiment worked well. Newspaper and TV public-
ity followed, and demand increased dramatically.
In 2003 on a Monday morning, the owner of a Coors distributorship explained that
the Coors company now allowed their distributors to carry a limited number of craft
beers. The owner had been impressed with the progress of Lad and Hooker beer and
liked the relation with the Safe Driver Foundation. He explained that he wanted to dis-
tribute Lad and Hooker beer. Quickly, in two days, the three settled on terms of the
potential deal. The brothers would have to sign an exclusivity agreement and a contract
that described volume - sensitive returns for the brothers (the brothers ’ share of revenues
increased as volume increased). The distributorship owner explained that the broth-
ers would have to develop a dark and light Lad and Hooker beer. If they agreed and
if they established a relationship with a reputable brewer, the distributor would carry
their accounts payable with a charge of 1% of the average balance every month. The
distributor insisted that the brewer would have to match the brothers ’ quality and satisfy
demand. The distributor insisted that when the contract rolled over, he must have a right
of first refusal to match any competing arrangement that the brothers found. Overall, the
arrangement was sufficient for the brothers to begin development and explore expanded
markets. Importantly, the brand was protected for the brothers.
On Wednesday, a wealthy friend, also taken with the product and interested in the
social mission, offered to finance the brothers ’ expansion in return for 51% of the stock
of the business. Uncertainty about whether the brothers should continue to do everything
themselves, partner with the distributor, or take their angel friend ’s offer caused debates
and two sleepless nights. However, they decided that they must act quickly to grow the
business because another craft brewer had begun to make contributions to a regional
charity.
On Saturday morning, the brothers agreed to the distributors ’ arrangement for one
year, and asked their friend to “ hold ” his offer for a year. As the arrangement developed
with the Coors distributor, Hans began to experiment with dark and light beer formulae
and Heinrich set about to find a brewer who could brew for them and who would let
Hans and Heinrich control the formula. Both initiatives moved quickly and successfully.
In 2004, the arrangement with the distributor was renewed for five years and the brothers ’
beer continued to dominate the regional craft beer market. Their competitor never grew
and it faded from the market. Hans and Heinrich expanded their product to Oregon and
Washington State and reported profits of $ 890,000 in 2007 with 100% of the stock in
their hands. Between 2004 and 2008, Lad and Hooker beer was packaged in bottles and
cans. An innovative Christmas 12 - pack with the social mission contribution emblazoned
on the package became a best seller for the distributor and the brothers. However, along
the way experiments with bar and restaurant distribution failed. Experiments with con-
tributions to Mothers Against Drunk Driving failed to attract sufficient attention in the
c30.indd 574 6/17/09 7:06:21 PM
574 J. ROBERT BAUM
region, and a buyout discussion with the distributor failed (the brothers proposed that they
purchase the distributorship, and the distributor countered with an offer to buy Lad and
Hooker).
Currently, Hans and Heinrich continue with the Coors distributor, but they are evalu-
ating the possibility of establishing their own distribution network, developing Lad and
Hooker soda, and development of a Brew Pub featuring Lad and Hooker beer.
Staub ’ s Famous Draft and Grub
In 1960, Marlan Staub ’s family had operated a Coors distributorship in Philadelphia, PA.
Coors beer was not pasteurized in the 1960s, and it was shipped in refrigerated trucks
to Pennsylvania and sold at a premium. Selling shipped beer at a premium was against
Coors policy, but the alternative for Coors was to fight a growing black market for their
fine Colorado beers. Over 30 years, Coors and the family business profited with little
apparent change. Marlan worked in the family business before it closed in 1996. Folks
said that Coors lost its special attraction in the region, and that Staub Beer Distributors
was slow to find alternative products. Staub Beer Distributors continued to pay the family
members exceptional salaries, even as the volume fell in the early 1990s. The cash drain
made it impossible to field an aggressive sales force or to promote Coors beer at the levels
demanded by Coors. The family business closed in 1996.
Marlan liked beer and he needed to do something to support his young family. He had
desperately tried to fi nd financing for the family business in its dying days, so he had local
“ angel financing ” connections. He decided to lean on the two things that he knew about:
beer and fi nancing.
Marlan read two books about beer making and decided that he could do it. In addition,
his exposure to Coors plant tours for their distributors gave him confidence to start his
own beer operation, so he decided to open a brew pub in Reading, PA, and make and sell
Staub ’s Famous Draft and Grub.
Marlan figured that he would need $ 1 million to purchase a used craft beer still and to
begin operations in a vacant factory building in Reading. Three months after he decided
to brew and open the brew pub, Marlan found a great deal on a used 100% copper still
and purchased it for $ 115,000, which left him with $ 25,000 in savings. He made a mini-
mum down payment ( $ 5000) on the factory building and received a contract that required
no principle payments for a year. Marlan spent three months placing the copper still in the
building, and planning the space for the restaurant. During this period, Marlan received
publicity from an admiring newspaper, his family, and the public for his entrepreneurial
vision. Many were thrilled that an old industrial building would be restored.
Eight months after conception, Marlan employed a friend to develop the first beer, a
hearty dark beer, and he paid him $ 70,000 per year plus a promise of a share of the com-
pany. Again, he drew upon his dwindling savings.
Marlan spent five more months designing the renovations for the building. He fi nally
asked contractors to bid on the renovation 14 months after the initial purchase (at the 12th
month, the bank reluctantly extended the principal free mortgage period). Unfortunately,
renovation costs and the cost of restaurant fi xtures were finally quoted at $ 1.4 million.
The plumbing cost for the still exceeded estimates by $ 40,000. Marlan told local reporters
that the renovation delays were temporary.
c30.indd 575 6/17/09 7:06:21 PM
GAIN ENTREPRENEURSHIP SUCCESS THROUGH SWIFTNESS AND EXPERIMENTATION 575
Four months later, at the 17th month, Marlan had finally prepared advertising and bro-
chures that he planned to use to raise $ 1.5 million from community angels. Several history
buffs agreed to give Marlan $ 300,000 for convertible stock in the new company, and two
beer loving angels came forward with an additional $ 158,000. After an extended period
of soul - searching, which involved using angel money to pay the factory building mort-
gage, Marlan decided to move forward with a partial renovation. It was two whole years
after his decision to open before Marlan awarded a contract for a partial renovation of
the factory building for $ 400,000. He employed his friend, the brew master, to guide the
renovation. His hope was that evidence of construction would inspire investors to come
forward who had not responded to the initial offering. Meanwhile he had not been doing
much experimenting with the beer itself. Unfortunately, Marlan failed to make new con-
tacts for financing and the contractor ended up suing Marlan for late payment 16 months
after the plan to open a brew pub occurred. The contractor now owns the building and its
contents: a still, 110 bar stools, 16 old tables, and a grand opening poster advertisement
with a box of unsent fundraising brochures. The endless delays, all of which cost a great
deal of money, doomed the business to failure.
CONCLUSION
This chapter promotes swiftness and experimentation as entrepreneurial behaviors
that contribute to new venture success. Entrepreneurship occurs in the midst of
uncertainty, risk, and competitive barriers that are associated with new market entry
with new products, processes, and business models. Swiftness and experimentation
are sensible responses because they produce market feedback where little infor-
mation exists. Information can guide revision of market offerings – even revision of
market and business model choices to yield attractive profi table offerings.
Creativity, tenacity, self - efficacy, and goal setting are among the factors that enable
swiftness and experimentation, which has been confirmed in entrepreneurship
research. The factors that contribute to the focal entrepreneurial behaviors, presented
here as principles of entrepreneurship, are enhanced with industry and venture
experience, as well as learning from expert models and creativity and goal - setting
enhancement programs.
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EXERCISES
Venture change
In most successful ventures, the product, processes, or business model that ultimately
finds market acceptance and profitability are some variation of the original market entry.
Choose an example and write a short history (two paragraphs) of the changes that have
occurred. Identify the period from market entry to today and point to evidence of swift-
ness and experimentation.
If you do not have an idea yourself, you could write about laptop computers, the auto-
mobile, or mobile telephones. If you can, indicate which of the original entrants survived.
Business venture idea
Divide into groups of 3 – 6 people. Come up with an idea for a new business venture, and
assume that you have $ 2 million in financing. If your new venture idea could be copied,
how fast would you have to move to introduce your fi rst product? How fast would you need
to expand from your local market? Assuming everything does not go as planned, what types
of experiments could you try to see if some variant on your original idea might work?
c31.indd 579 6/17/09 3:26:10 PM
Part IX
WORK, FAMILY, TECHNOLOGY,
AND CULTURE
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31
Achieve Work – Family Balance
through Individual and
Organizational Strategies
BORIS B. BALTES AND MALISSA A. CLARK
As the average workweek is steadily increasing in the USA, along with the number of
dual - earner households, many workers today find themselves struggling to balance their
work and family lives. Indeed, a recent poll by the Equal Opportunities Commission
found that nearly three out of five adults believe it is harder now for working parents to
balance work and family life than it was 30 years ago. Because of concerns such as this,
both organizations and researchers have become increasingly focused on a better under-
standing of what helps employees to balance their work and family lives. To date, most
of the focus has been on how organizational initiatives (e.g. flextime) can help individu-
als manage these two goals but recent research has begun to realize the importance of
individual level strategies in achieving this balance. The guiding principle of this chap-
ter is that both individual and organizational strategies are necessary if employees are to
achieve work– family balance and that the use of individual strategies can often be affected
by organizational level factors. In the present chapter, we present a definition of work–
family balance, followed by a discussion of the organizational and individual strategies
that can help one to achieve balance.
WORK– FAMILY BALANCE (CONFLICT)
Work – family conflict can be defined as “ a form of interrole conflict in which the role
pressures from the work and family domains are mutually incompatible in some respect ”
(Greenhaus and Beutell, 1985 , p. 77). Individuals may feel conflict because their work life
is interfering with their family life, termed work interfering with family (WIF) confl ict, or
they may feel conflict because their family life is interfering with their work life, termed
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582 BORIS B. BALTES AND MALISSA A. CLARK
family interfering with work (FIW) conflict (Frone, Russell, and Cooper, 1997). Work– family
balance is a newer term, but basically can be understood as a person achieving a low level
of work – family confl ict.
It should also be pointed out that researchers and practitioners have recently begun to
focus on the positive aspects of participating in multiple life roles. Perhaps this shift was
partially influenced by the ideas put forth by proponents of positive psychology or perhaps
this shift was due to a realization that some individuals were fi nding ways to thrive in multi-
ple life roles. In either case, research in the work– family domain has begun also to focus on
the concept of work- family facilitation (often referred to as enrichment, or positive spillo-
ver). In the present chapter, however, we will focus solely on work– family balance.
What causes conflict between work and family roles?
In the work domain, significant relationships between levels of WIF conflict and a myriad
of variables have been found (for a comprehensive review of antecedents of WFC, see
Byron, 2005 ). Not surprisingly, a key variable is time. Both the number of hours worked
and the amount of overtime worked have been linked to increased work– family confl ict.
Furthermore, having heavy workloads and responsibilities in one ’s job can increase an indi-
vidual ’s stress, which can then carry over to his or her family life. Various shift schedules
have also been linked to WIF conflict. For example, working second or third shifts can cause
increased WIF conflict because these schedules often make it difficult to arrange childcare or
attend children’s events that are often scheduled around the typical work shift (i.e. fi rst shift).
Another factor that can increase an individual ’s level of WIF conflict is a lack of job
autonomy, presumably because having freedom to adjust one’s job responsibilities can lessen
the extent to which work interferes with the demands of family. In addition to autonomy,
job type can have an impact on WIF conflict, as some jobs (e.g. lawyer, doctor) require
long hours and are less flexible than other jobs. Having a supportive supervisor has been
shown to reduce the extent to which work can interfere with family life, because not only
can supervisors provide instrumental aid to their employees, which can reduce workload
and work stress, but they can also provide emotional support and advice. Conversely, a
lack of supervisor support has been found to increase work– family confl ict.
In the family domain, positive linkages have been found between WIF confl ict and/or
FIW conflict and marital status, size, and the developmental stage of family. Family stres-
sors (i.e. parental workload, extent of children’s misbehavior, lack of spousal support, and
degree of tension in the marital relationship) and family involvement have been shown to
increase the extent to which family can interfere with work. For example, if individuals
have many family responsibilities (e.g. picking children up from school, cooking dinner)
and they do not get support from their spouse, such family stress could drain individu-
als both mentally and physically, thereby leaving less energy that can be devoted to their
work. Both the number and age of children play a role in the level of FIW confl ict experi-
enced by parents. Past research has demonstrated that the number of children individuals
have impacts their ability to accommodate family responsibilities with work demands.
Additionally, younger children typically require more care and thus more resources from
their caregivers, which results in greater conflict between work and family. More recently,
eldercare has become a topic of interest since an ever- increasing number of employees are
also dealing with this issue which can contribute to FIW conflict. Individuals can benefi t
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583 ACHIEVE WORK – FAMILY BALANCE
from various forms of social support, as negative relationships have been found between
WIF conflict and spousal and family support and between FIW conflict and spousal and
family support.
In sum, there are a number of antecedents that cause work– family confl ict. However,
these can all be categorized as either work ( job) or family stressors. Furthermore, it should
be apparent that any strategy to achieve work– family balance must be targeted at reduc-
ing these stressors. Indeed, organizational initiatives aimed at reducing such stressors have
been attempted with varying levels of success; the next section will address such initiatives.
ORGANIZATIONAL STRATEGIES
Organizational initiatives intended to help employees balance their work and family lives
are becoming increasingly popular. These initiatives include implementing fl exible work
hours (flextime), allowing telecommuting, compressed workweeks, offering on - site child-
care, and implementing part - time schedules and job sharing. Research has shown that
these initiatives can reduce employees ’ work– family conflict and increase their family
satisfaction. For example, in a 2000 study by the Boston College Center for Work and
Family, which surveyed over 1300 employees and 150 managers in six companies, fl exible
work arrangements had a positive impact on productivity, employees ’ quality of work,
and employee retention. We believe that with careful implementation and a supportive
organizational culture, these initiatives have the potential to increase employees ’ work–
family balance. We will discuss each of these organizational initiatives and their benefi ts
and potential drawbacks in more detail below, and will conclude with a discussion of how
an organization’s culture can help or impede an organization’s effort to increase their
employee ’ s work – family balance.
Flextime. To date, the most widely used organizational initiative to help workers balance
their work and family lives is fl extime, or flexible workweeks. Flextime involves setting a band
of time where all employees are required to be in the office (typically from 9 or 10 A.M. until
2 or 3 P.M.), but employees have the discretion as to exactly what time they will arrive and
leave work outside that band of time. An obvious benefit of a fl exible workweek is that
employees can start or end their day earlier or later, depending on their other non - work obli-
gations and needs at that time. Thus, if employees have an outside obligation in the afternoon
on a particular day (e.g. doctor ’s appointment, child ’s sporting event) they can simply arrive at
work earlier in the morning, which allows them to leave earlier in the afternoon. According to
a Families and Work Institute national study, 68% of companies allow at least some employees
to periodically change starting and quitting times (although only 34% of companies allowed
employees to do this on a daily basis), and the percentage of com panies offering fl extime has
increased from 1998 to 2005. This national study also found that flextime was offered more
frequently in smaller companies (50 – 99 employees) than larger companies (1000+ employees).
Also, according to a large - scale study of over 30,000 government employees, approximately
41% of employees surveyed utilize flextime (Saltzstein, Ting, and Saltzstein, 2001 ).
Overall, research has shown that flextime is associated with many individual as well as
organizational benefits. Several studies have found that flextime is associated with positive
attitudinal outcomes. For example, flextime has been associated with greater employee loyalty
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584 BORIS B. BALTES AND MALISSA A. CLARK
to the organization, and greater employee job satisfaction (Baltes, Briggs, Huff, Wright, and
Neuman, 1999 ). Additionally, employees who have greater control over their work hours have
also reported reduced work– family conflict. In addition to these attitudinal outcomes, research
has linked flextime to various organizational outcomes, such as increased productivity and
reduced turnover.
There is some evidence that all forms of flextime are not created equal, however. For
example, researchers have found that some flexible schedules offered by organizations
allow for very little flexibility, and that the number of hours in which an employee actu-
ally works may increase with a flexible schedule. In fact, one study of Canadian employees
found that the percentage of employees working 50+ hours doubled or sometimes tripled
in the presence of flexible work arrangements (Comfort, Johnson, and Wallace, 2003 ). In
the Boston College Center for Work and Family ’s 2000 study, researchers made a distinc-
tion between traditional flextime and daily fl extime. Whereas traditional fl extime involves
employees choosing their start and end times, which must include certain core hours, daily
fl extime is a working schedule in which employees are allowed to vary their work hours on
a daily basis. The researchers at the Center for Work and Family found that employees
using daily flextime were more satisfied with their jobs, lives, and more productive than
employees using traditional fl extime.
Compressed workweeks. Compressed workweeks are used in a broad range of industries, includ-
ing manufacturing, health care, food service, government, the airline industry, and law enforce-
ment (Harrington and Hall, 2007 ). With a compressed workweek, the workweek is shortened
to fewer than five days by having employees work longer hours on the days they do work.
There are many different variations of a compressed workweek, but the most typical is to
have full - time employees (i.e. 40 hour workweek) work four 10 - hour days per week instead
of fi ve eight - hour days per week. According to the Families and Work Institute ’s study, 39% of
companies allow at least some employees to work a compressed workweek schedule, and the
number of companies offering compressed workweeks has increased since 1998.
As with many of the family - friendly policies we discuss, there are pros and cons to imple-
menting a compressed workweek in an organization. Among the benefits are that compressed
workweeks have been shown to decrease work– family conflict, stress, and fatigue, as well as
increase work satisfaction and positive attitudes about the effect of work schedules on one ’s
family and social life. In addition to these attitudinal benefits, compressed workweeks have
been shown to reduce employee absenteeism and increase productivity.
Compressed workweeks can be problematic for some employees, however; specifi cally,
for those employees who have time - specific responsibilities (e.g. picking up a child from
school). Indeed, Saltzstein et al. ( 2001 ) found that mothers with an unemployed spouse
(who can presumably help with childcare or eldercare obligations) experienced signifi cantly
more satisfaction with their work– family balance as a result of a compressed workweek,
whereas unmarried mothers experienced signifi cantly less satisfaction with work– family bal-
ance. This finding illustrates that compressed workweeks may only benefi t employees when
they have someone to assist in their time - specific responsibilities. In the case of childcare,
most daycare facilities close at 6
P.M., which can make it difficult for employees who do not
have outside assistance to find childcare on the days they work extended hours.
Telecommuting. Telecommuting is generally defined as working from home or off - site
for all or part of the workweek, made possible by advances in telecommunication and
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585 ACHIEVE WORK – FAMILY BALANCE
information technology. According to the 2005 Families and Work study of employers,
31% of companies allowed some of its employees to work from home or off - site on a regu-
lar basis. However, telecommuting is not suitable for all jobs, or all people. Telecommuting
is most often used in jobs that rely heavily on phones, the internet/computers, and other
technology devices, where face - to - face time with other employees or customers is not as
essential, and where constant supervision is not necessary. Further, researchers have iden-
tified several personality traits and skills that differentiate employees suitable for telecom-
muting from those who would struggle with such a work arrangement. Examples include
self - motivation, time management and organizational skills, trustworthiness, comfort with
solitude, strong communication skills, independence, and confi dence.
Like flextime and compressed workweeks, there are pros and cons to telecommuting.
From an employee ’s perspective, telecommuting can have many advantages, including the
cost savings on gas, reduced time spent commuting to work, greater autonomy, and greater
flexibility of the work schedule. From an organization’s perspective, telecommuting can
increase employee productivity, lower employee absenteeism, and reduce overhead costs.
Research has shown telecommuting to have a positive impact on employees, in that tele-
commuting has been linked to greater work– family balance than traditional occupations,
more perceived control over one ’s work and family roles, higher performance ratings, and
reduced depression rates.
Conversely, telecommuting can pose challenges to employees and organizations alike.
Employees may feel isolated from their co - workers, or have difficulty separating their
work and family roles, while organizations may have difficulty monitoring employees
as well as fostering team synergy. Indeed, research has linked telecommuting to increased
work – family conflict, increased spillover from work to family, and higher depression rates.
Kossek, Lautsch, and Eaton ( 2006 ) point out that telecommuting may lead to increased
work – family conflict because the border between the work and family domains is more
permeable if one is working at home. To resolve this, some employees have developed
routines to help solidify the role boundaries between work and family, such as putting on
work clothes, reading the business section of the newspaper, or saying goodbye to the fam-
ily before stepping into the home offi ce.
On - site childcare. Another recent trend within organizations is to provide a daycare facility
on - site. Providing an on - site childcare facility has the potential to increase work– family bal-
ance for employees with children, presumably because employees do not have to travel to
drop off and pick up their children, and they can visit their children at various times in the
workday (e.g. during their lunch hour), thus helping parents to feel close to their children even
while at work. Although a recent study found that the usage of employer- provided childcare
is relatively low, those using such services have reported more positive attitudes towards man-
aging their work and family responsibilities and were less likely to experience problems with
daycare. On - site childcare has also been found to result in positive organizational outcomes,
such as increased organizational loyalty, and reduced absenteeism and turnover. A potential
unintended outcome for on - site childcare is that there may be a backlash, or “ frustration
effect, ” from workers who are not able to take advantage of such a policy, either because they
do not have children, are on the waitlist, or cannot afford such services.
Part - time and job sharing. Another type of organizational policy aimed at helping employ-
ees balance their work and family involves reducing the total number of hours employees
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586 BORIS B. BALTES AND MALISSA A. CLARK
work per week. This can be accomplished either by reducing the number of hours an
employee works from full - time to part - time, or by dividing up the responsibility of one
full - time position among two employees (i.e. job sharing). Many organizations currently
use these policies, with 53% allowing employees to switch from full - time to part - time
and 46% allowing employees to share jobs (Bond, Galinsky, Kim, and Brownfield, 2005 ).
Research has shown that employees who reduced their hours to part - time experienced
greater life satisfaction, increased work– family balance, felt less stressed, and reported bet-
ter relationships with their children.
However, part - time work may not be a feasible alternative for certain occupations
(e.g. lawyer, doctor) thus limiting its usefulness. Job sharing is also only suitable for some
pos itions, mostly ones that require long workweeks (greater than 40 hours/week) or jobs
that cannot be easily reduced to part - time positions. If the employees sharing a particular
position are able to coordinate and work well together, job sharing can be a great option
for employees. For example, if one employee has an unexpected family situation, he/she
can work out an arrangement with his/her job sharing partner to cover this time lost.
Understandably, there are some potential disadvantages that come with sharing a job with
another person, particularly if one of the partners is not carrying his/her share of the
workload, or there are communication breakdowns. Additionally, sometimes the job per-
formance of each individual employee is not easily distinguished, which can be problem-
atic if individuals make unequal contributions.
MEDIATORS/MODERATORS OF ORGANIZATIONAL STRATEGIES
In order for organizational strategies/initiatives to help employees balance their work and
family lives, the employees first need to (1) use the policies that are offered to them and (2)
perceive that the organization is fully supportive of the use of such policies. For example,
if the organization offers on - site childcare, but charges so much for these services that only
the top executives in the company can afford such a service, then it will not be effective in
helping most of the organization’s employees manage their work and family (a point we
discuss below in one of our case studies). Second, employees will not take advantage of
such policies if they perceive negative ramifi cations may come from utilizing such a policy.
For example, if an organization offers telecommuting but employees believe that if they
take advantage of such a policy their manager will think negatively of their work ethic,
which may subsequently impact their potential for promotions or pay raises, then they
will not take advantage of such a policy. Indeed, Allen ( 2001 ) points out that offering
family - friendly policies may not be suffi cient; rather it is the perception that the organiz ation
is family supportive that mediates the relationship between the family - friendly policies
available and positive outcomes. Perceptions of a family - supportive environment are an
individual level variable that reflects individual perceptions and can vary widely within
an organization. Family - friendly culture on the other hand is an organizational level vari-
able that should refl ect “ reality ” and assumes that agreement exists between employees on
how family - friendly the culture actually is. Family - friendly culture has been found to act as
a moderator. Specifically, we believe that family - friendly policies will have a greater impact
on facilitating work– family balance in organizations with a family - friendly culture than
those with a culture that does not support its policies. Indeed, Thompson, Beauvais, and
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587 ACHIEVE WORK – FAMILY BALANCE
Lyness ( 1999 ) found that a supportive work– family culture was related to employees ’ use
of work – family benefits, and both the availability of such policies and a supportive work
culture predicted lower work– family conflict. Taking the organization’s family - friendly cli-
mate into account may explain why some prior organizational initiatives did not work, as
it may be difficult to fully take advantage of such family - friendly policies if the climate
does not support it.
In sum, while some organizational initiatives have been successful at increasing work–
family balance, it appears that many factors such as individual perceptions as well as
organizational level culture play a role in their success. Simply implementing organiz-
ational policies such as flextime or telecommuting is not enough; the organization must
ensure that its culture is supportive of such policies as well.
HOW TO IMPLEMENT ORGANIZATIONAL STRATEGIES
From our discussion, we hope it is clear that organizations cannot simply implement one or
more family - friendly policies, sit back, and watch the employees thrive. On the contrary, an
organization must ensure that its leaders fully support and embrace such a policy and make
efforts to change the company culture if it is currently not supportive of such endeavors.
Additionally, we believe that even effectively implemented organizational initiatives are
only half of the equation. That is, employees should realize that organizational policies
aimed at reducing their employees ’ work– family balance are not one - size - fits - all solutions.
Instead, employees must take the initiative and evaluate their particular work and family
stressors and how they are working to cope with them. Effective management of work and
family roles takes efforts by both the organization and the individual. Thus, the following
section will discuss how employees can take steps to improve their work– family balance
through various individual strategies.
INDIVIDUAL STRATEGIES
Over the past 15 years a relatively small but increasing amount of research has examined
the role of the individual in reducing their work– family conflict (i.e. achieving work– family
balance). For example, it has been found that women who possessed self - control skills were
less stressed by handling multiple roles than were women who did not possess these skills.
Furthermore, qualitative research studies have also shown that both dual - career men and
women use certain coping strategies more during stages of their lifecycles which included
more stressful situations (i.e. young children at home). For instance, Becker and Moen ( 1999 )
found that many dual - earner couples engaged in what they called scaling back strategies (i.e.
reducing and restructuring a couple ’s commitment to paid work). While early research on
individual strategies lacked a cohesive framework, this recently changed with the introduction
of a meta - theory entitled Selection, Optimization, and Compensation (SOC).
Selection, optimization, and compensation
SOC was originally developed as a lifespan model to explain successful adaptation to the
loss of resources due to aging through adjustments in the use and allocation of resources
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588 BORIS B. BALTES AND MALISSA A. CLARK
(Baltes and Baltes, 1990 ; Baltes, 1997 ). It is based on the underlying assumption that limited
internal and external resources (e.g. mental capacity, time, social support) require people
to make choices regarding the allocation of those resources. These limitations of resources
necessitate the use of several processes: selection, optimization, and compensation.
Selection is divided into two categories, elective selection and loss - based selection. The
primary focus of both types of selection is on choosing goals. Specifically, one always has
a limited amount of resources and selection is needed to focus on a subset of possible
goals. Elective selection involves choosing from among positive options. Loss - based selec-
tion occurs when an individual is pressured to change or abandon certain goals (or change
one ’s goal hierarchy) by the loss of some internal or external resource.
Optimization and compensation pertain to the means for attaining goals. Optimization
refers to the acquisition of and refinement in the use of resources to achieve selected
goals. General categories of optimization include persistence, practice, learning of new
skills, modeling of successful others, as well as the scheduling of time.
Compensation occurs when lost resources (or those anticipated to be lost, for example
time) are replaced by new ones in order to sustain progress towards one ’s existing goals.
The use of external aids (e.g. the internet) or help from others (e.g. childcare) are examples
of compensatory behaviors.
As stated previously, work – family conflict occurs when both are important goals and an
individual ’s time and energy resources are limited. Since the theory of SOC hypothesizes
(and research supports) that, when faced with the limitation of resources (e.g. time, energy),
those who use SOC strategies are more likely to maximize gains and minimize losses, it
is plausible to assume that individuals who use SOC behaviors will be more successful
at dealing with the competing roles of work and family. For example, after the birth of a
child, an individual could engage in loss - based selection and choose to focus on a more
limited number of work goals (e.g. no longer focus on organizational networking) and/
or family goals (only focus on the immediate and not extended family) given that their
resources have become more limited. Further, an individual could engage in optimiz ation
and decide what individual skills (e.g. organizational, technological) could be acquired
or improved to help insure successful goal completion. For example, if an employee has
decided that successfully leading/managing her workgroup is a goal she will pursue then
she can decide to take a leadership training program to enhance her skills. By enhancing
her skills she should more efficiently achieve the same level of productivity allowing more
time for family commitments. Finally, individuals can engage in compensation by main-
taining their prior productivity (even though they may have to work less because of family
commitments) through the use of delegation. They could attempt to give more responsi-
bility to subordinates to decrease their actual workload but maintain overall productivity.
Research has now demonstrated that the use of these SOC strategies are related to
lower amounts of job and family stressors and thereby lower amounts of WFC. For
example, the results from a study by Baltes and Heydens - Gahir ( 2003 ) show that employees
who reported using SOC strategies at work and/or at home also reported lower amounts
of job and family stressors, and subsequently work– family confl ict.
Qualitative, interview - based research has provided us with some specific examples of
SOC that employees report using.
Examples of selection strategies in both the work and family domain included:
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589 ACHIEVE WORK – FAMILY BALANCE
“ I prioritize my workload. ”
“ I say no to other projects because I don’t have the time. ”
“ (We) sit down as a family and say ok this is what we want to do, this is our fi ve year
plan, and this is our five month plan. You have to prioritize! ”
Examples of optimization in both domains included:
“ I try to fi nd the best way to do it, or the fastest way to complete home or job tasks. ”
“ I increase my efficiency by eating my lunch at my desk while I continue to work. ”
“ I have increased my listening skills so as to better understand my family. ”
“ I reevaluate what didn’t work to make sure I do things more efficiently the next time. ”
“ I keep a calendar of when things are due. ”
Examples of compensation in both domains included:
“ I try to empower more people to do more things; I try to delegate more.”
“ I try to share (the workload) between different individuals so that it ’s not all put on
me to complete tasks. ”
“ I verbalize to my boss that I need help. ”
“ We give the kids more responsibility at home. ”
“ I hired a part - time housekeeper. ”
Additional research appears to indicate that, given one ’s selected goals, the strategy of
optimization seems to be the most effective in reducing work and family stressors. Of course,
the exact way individuals choose to engage in SOC strategies is open to much variability.
While the use of the SOC model as a framework has demonstrated that at a broad (or
general) level the reported use of SOC strategies is related to lower work family confl ict,
what is still needed is more research that generates an exhaustive list of specifi c behaviors
that might be used in the future as part of a training program for employees.
MODERATORS OF INDIVIDUAL STRATEGIES
Research has suggested two major types of possible moderators with respect to individual
level strategies. First, one can have variables that act as moderators with respect to the poten-
tial efficacy or even the possibility of using any of the SOC strategies. For instance, the pres-
ence of training programs that allows an employee to optimize (i.e. become more effi cient
at work tasks) would probably moderate the effect that optimization strategies might have.
Specifically, attempts at optimization might be more effective if the organization offered
training programs. Another example of this type of moderator would be job type. For example,
some research suggests that use of SOC strategies is affected quite a bit by job type/level.
A manager may have much more flexibility when it comes to prioritizing his/her workload
(i.e. elective selection) than a clerical employee has. Thus, even if a clerical worker would
choose to engage in elective selection they do not have the autonomy to do so. Finally, socio -
economic level could act as a moderator with respect to the use of compensation strategies.
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590 BORIS B. BALTES AND MALISSA A. CLARK
For instance, wealthier families would be able to engage in compensatory behaviors such as
the use of daycare and/or household help much easier than poorer families.
A second set of moderators of any of the SOC strategies are those variables that could
affect the demand on one ’s resources or the supply of one ’s resources. These types of
variables would make the use of individual level strategies more important to achieving
work– family balance. That is, it is most likely that employees in the most demanding situ-
ations can benefit the most. To date, we are aware of only one study that had theorized
and examined these types of potential moderators of individual level strategies (Young,
Baltes, and Pratt, 2007). This study examined SOC - type strategies and theorized that
SOC strategies should be most effective for the individuals who have the most demands
on their resources. Several factors that impact the amount of resources demanded of, or
resources available to, an individual with respect to the domains of work and family were
tested as potential moderators. Furthermore, the study found that the age of a partici-
pant ’s youngest child at home, family support, the number of family - friendly policies
offered by the organization, supervisor support, and participant age moderated the work
(family) SOC – job (family) stressor relationship. For example, as the age of the youngest
child in the house decreased (it has been found that younger children put more resource
demands on parents) the use of SOC strategies became much more effective/useful.
In sum, it appears as though these individual level strategies are very important for
achieving work– life balance especially for the employees who are in the most demanding
situations.
HOW TO IMPLEMENT INDIVIDUAL STRATEGIES
Implementation of individual strategies is obviously in the hands of each employee.
However, we hope it has become clear that organizational level factors may infl uence the
extent to which SOC behaviors can be undertaken by employees and potentially also
the extent to which these behaviors/strategies are effective. For example, an individual
attempting to optimize through the use of new skills training will have a harder time if
the organization does not offer or support the use of training programs.
CASE EXAMPLES
First Tennessee Bank
First Tennessee Bank has earned top ratings when it comes to being a family - friendly com-
pany by both Business Week and Working Mother. First Tennessee offers a wide variety of
family - friendly programs, including flextime, telecommuting, on - site childcare or vouchers,
job sharing, prime - time schedules (reduced hours with benefits), and adoption benefi ts. In
addition, First Tennessee was one of the only companies surveyed by Business Week that have
actually measured the effect of work– family strategies on profits. However, perhaps even
more impressive is that family friendliness is ingrained in both culture and business strat-
egy. Realizing that family issues do affect business results, executives have integrated issues
pertaining to balancing work and family into job design, work processes, and organizational
structures. Company executives have made strides to show workers that the company is
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591 ACHIEVE WORK – FAMILY BALANCE
serious in their endeavors to help employees balance their work and family lives. To ensure
that the work– family policies are working smoothly and that employees are satisfi ed with
them, First Tennessee has created the First Power Council, which is comprised of high level
executives and currently chaired by the HR manager. The First Power Council meets quar-
terly to go over employee satisfaction surveys and to discuss any matters (work – family related
and otherwise) of concern to the employees. John Daniel, HR manager at First Tennessee,
views the work– family benefits offered to employees as a win – win: “ I often get more pro-
ductivity from the people we offer work– family benefits to than the average person because
they are so appreciative of the flexibility the program allows. In sum, offering work– family
benefits is a great way to attract and retain the right people. ”
First Tennessee Bank provides a great example of how a supportive culture can
enhance the effectiveness of family - friendly policies. Regardless of how many benefi ts are
offered to employees, if only a select few are able/allowed to use them, or if the company
culture still does not support the use of such policies on a regular basis, then employees
will not feel the benefi ts of such programs.
XYZ Company
The top management at XYZ Company (a fictional but representative company) has
recently implemented several work– family policies in response to employee satisfaction
surveys that indicated many employees were concerned about balancing their work and
families. After consideration of which policies would work best for their particular com-
pany, executives decided to offer flextime and part - time work to employees. Despite their
good intentions and initial excitement for these work– family programs, recent events at
the company suggest that the top management did not follow through to ensure that these
work– family policies were being properly implemented.
Since the implementation of the two work– family policies, several employees have
filed complaints that they have been denied the opportunity to use them. Several employ-
ees were denied flextime because their supervisor reportedly stated that their particular
job within the company required that they be there during normal operating hours to deal
with clients. Other supervisors reportedly denied part - time work because, in their opinion,
it was an “ all or nothing ” position – either the employee commits to full - time work, or
they will find someone who will commit to full - time. Some complaints were fi led because
managers did offer flextime or part - time work, but only when the employees agreed to a
lesser pay or a lower level position. Upon investigation of these instances, top manage-
ment discovered that some supervisors were strongly opposed to such policies because
they feared this would decrease the productivity of their work group.
According to recent focus groups held with XYZ employees, once employees learned of
these grievances regarding the flextime and part - time work options offered to employees,
employees began to fear that taking advantage of such policies would in fact limit their abil-
ity to move up within the organization. These fears were not entirely unwarranted, as there
have been at least two documented instances of an employee being demoted or transferred
to a less desirable position within two months of requesting either the flextime or part - time
work option from his/her supervisor. Although the supervisors in these two instances deny
such a link, the focus group discussions revealed that many employees believe otherwise.
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592 BORIS B. BALTES AND MALISSA A. CLARK
In sum, although XYZ Company had intended to help employees balance their work
and family by offering fl exible benefits, these policies are not having the intended conse-
quences. First, because top management have not clearly conveyed to company supervisors
that these work– family policies should be encouraged, and every attempt should be made to
accommodate employees who wish to take advantage of them, some supervisors have been
reluctant to grant these flexible arrangements to their subordinates for fear that they would
decrease their work group productivity. Thus, in many ways, these work– family policies
failed in their attempt to help employees balance their work and family, because either the
employees have been denied such benefits or the employees were reluctant to ask for such
an arrangement for fear of demotion or other work- related consequences. Most importantly,
at XYZ Company, the implementation of the work– family policies has actually caused more
damage than benefi t. Specifically, since the flextime and part - time work policies have been
implemented, recent employee satisfaction surveys have shown a decrease in job satisfac-
tion and organizational commitment. Moreover, turnover has increased from 20% to 28%
since flextime and part - time work were first offered to employees. Thus, not only have these
work – family policies failed to help improve employees ’ work – family balance, they have actu-
ally lowered (based on the employee surveys mentioned above) employee satisfaction and
commitment to the organization. Company XYZ is a prime example of just how important
it is that all company employees, as well as the company culture, is supportive of such poli-
cies. The bottom line is this: if you are going to offer work– family policies to employees, you
have got to do it right.
REFERENCES
Allen , T. D. ( 2001 ). Family supportive work environments: The role of organizational
perceptions. Journal of Vocational Behavior, 58 , 414–435 .
Baltes, P. B. ( 1997 ). On the incomplete architecture of human ontogeny: Selection,
optimization, and compensation as foundation of developmental theory. American
Psychologist, 52 ( 4 ), 366–380 .
Baltes, P. B. , and Baltes , M. M. (eds). ( 1990 ). Successful Aging: Perspectives from the Behavioral
Sciences. Cambridge, MA : Cambridge University Press.
Baltes, B. B., Briggs , T. E. , Huff , J. W., Wright , J. A. , and Neuman , G. A. ( 1999 ). Flexible
and compressed workweek schedules: A meta - analysis of their effects on work- related
criteria . Journal of Applied Psychology, 84 , 496–513 .
Baltes, B. B., and Heydens - Gahir , H. A. ( 2003 ). Reduction of work – family confl ict
through the use of selection, optimization, and compensation behaviors. Journal of
Applied Psychology, 88 , 1005–1018 .
Becker, P. E. , and Moen , P. ( 1999 ). Scaling back: Dual earner couples ’ work – family strat-
egies. Journal of Marriage and the Family, 61 , 995–1007 .
Bond , J. T., Galinsky, E., Kim , S. S. , and Brownfield , E. ( 2005 ). The 2005 National Study of
Employers. New York: Families and Work Institute.
Byron , K. ( 2005 ). A meta - analytic review of work – family conflict and its antecedents.
Journal of Vocational Behavior, 67 , 169–198 .
Comfort , D., Johnson , K., and Wallace, D. ( 2003 ). Part - time work and family - friendly
practices in Canadian workplaces. Human Resources Development Canada, 6 , 1–78 .
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593 ACHIEVE WORK – FAMILY BALANCE
F r o n e , M. R. , Russell , M., and Cooper, M. L. ( 1997 ). Relation of work – family confl ict
to health outcomes: A four- year longitudinal study of employed parents. Journal of
Occupational and Organizational Psychology, 70 , 325–335 .
Greenhaus , J. H. , and Beutell , N. J. ( 1985 ). Sources of conflict between work and family
roles . Academy of Management Review, 10 , 76–88 .
Harrington , B. , and Hall , D. T. ( 2007 ). Career management and work - life integration: using self -
assessment to navigate contemporary careers. Thousand Oaks, CA : Sage Publications.
Kossek , E. E. , Lautsch , B. A., and Eaton , S. C. ( 2006 ). Telecommuting, control, and
boundary management: Correlates of policy use and practice, job control, and work-
family effectiveness . Journal of Vocational Behavior, 68 , 347–367 .
Saltzstein , A. L. , Ting, Y. , and Saltzstein , G. H. ( 2001 ). Work – family balance and job
satisfaction: The impact of family - friendly policies on attitudes of federal government
employees. Public Administration Review, 61 , 452–467 .
Thompson , C., Beauvais , L. L. , and Lyness , K. S. ( 1999 ). When work – family benefi ts are
not enough: The influence of work– family culture on benefi t utilization, organizational
attachment, and work– family confl ict . Journal of Vocational Behavior, 54 , 392–415 .
Young , L. M. , Baltes , B. B. , and Pratt , A. ( 2007 ). Using selection, optimization, and com-
pensation to reduce job/family stressors: Effective when it matters. Journal of Business
and Psychology, 18 , 1–29 .
EXERCISES
Designing and implementing family - friendly policies from the top down
Students may work individually or in groups, and they are to assume the role of CEO
of a large electronics manufacturer. The company has 150 employees – of which 75
are manufacturing, 30 are support staff (accounting, administrative), 30 are sales repre-
sentatives and account managers, and 15 are high - level executives. The company is 50%
males, average age of 35. The shareholders recently decided they want the organization
to become more family friendly, and wishes to implement a family - friendly policy, but they
can’t decide on the best one, how it should be implemented, and who should be allowed
to use it (i.e. should everyone in the company be able to use the policy, or a select group of
employees?). As CEO, he/she must come to decisions on several points:
◆ Which policy or policies will you be implementing (e.g. fl extime, compressed work-
weeks, job sharing)?
◆ Who should be allowed to use the particular policy/policies? Will it cause problems
if everyone is not treated the same?
◆ Finally, how can you ensure the organizational culture is going to support the policy?
Generating individual strategies/behaviors
Judy is a HR manager with a full - time position at a large beverage company. She has a
significant other who also has a full - time position and two small children (both of whom
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594 BORIS B. BALTES AND MALISSA A. CLARK
are in daycare). Given that her job as a manager is not always limited to a 9 to 5 schedule
(e.g. sometimes she needs to work late or take work home) combined with the fact that
her children are involved in quite a few activities (e.g. soccer, swimming) she finds it very
difficult to successfully fulfill both her roles as a manager and as a parent/spouse. She
often finds that her work interferes with her family (e.g. needs to work late which causes
her to miss or cancel family activities) but also that her family role interferes with her work
(e.g. cannot meet deadlines partly due to family responsibilities that do not let her complete
work at home). Students may work individually or in groups and they are to try to identify
behaviors/strategies that Judy could use to try to better balance her work and family life.
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32
Use Information Technology
for Organizational Change
MARYAM ALAVI AND YOUNGJIN YOO
The information age is upon us. With a few clicks of a mouse button, we can instantly
access everything from current stock prices to video clips of current movies, with millions of
bytes of information in between. Like the steam engine helped enable the transition into the
industrial age, information technologies are fueling the transition into the information age.
The phrase information technologies (IT) refers to computer and communication tech-
nologies (both hardware and software) used to process, store, retrieve, and transmit infor-
mation in electronic form. Today, information technologies are pervasive in industrialized
nations and are changing the way we work and live with an accelerating pace. According to
Forrester Research, it was estimated that there would be over 1 billion personal computers
(PCs) in the world by the end of 2008 and the number is expected to double by 2015. While
it will have taken 27 years to reach the first billion PCs in the world, it will take only seven
years to reach the next billion (Champan, 2007 ). When we consider new forms of comput-
ing devices such as the mobile phone, the number is even more overwhelming. Consider the
following. According to a report by Reuters (November 29, 2007), there were over 3.3 billion
mobile phone subscribers in the world in November 2007, which is the half of the world
population. Furthermore, there are 50 countries in the world that have more mobile phones
than people. One can presume this dramatic penetration of IT will only accelerate over the
coming decade. According to Computerworld, the average spending on information technol-
ogies in the USA by various industries grew to 6.4% in 2008 from 3% in 1993.
Why do firms invest so heavily in IT? What are the organizational impact and outcomes
of IT? What positive changes can be expected and realized from IT applications in organ-
izational settings? These questions have been of great interest to both researchers and
practitioners in the field of information systems (IS) over the last 40 years. It is expected
that the study of the organizational impact and benefits of IT will increase in popularity
and importance due to the increasing dependence of global commerce on IT as well as
the steady introduction of new information technologies with new capabilities.
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596 M ARYAM A LAVI AND Y OUNGJIN Y OO
Dramatic and rapid developments in information technology have brought fundamental
changes in the strategic landscape. Companies can no longer rest on the success of yester-
years. Instead, they constantly need to look out for emerging new technologies that might
make their core products and strategies obsolete overnight. Many companies that used to
dominate their own market have seen their key products quickly becoming obsolete due
to these disruptive technologies. We will summarize some of the key technological trends
that underpin these fundamental changes. We then discuss four different ways to use IT as
a catalyst of organizational change in an information age.
EMERGING TECHNOLOGIES
Ever since organizations started using large mainframe computers for their back - offi ce auto-
mation in the 1950s, the development of new technologies have created new opportunities
to change organizations. The introduction of PCs, the development of network technology,
and the emergence of the internet as a viable platform of commerce activities all signifi -
cantly influenced organizations. Now, the introduction of ubiquitous computing, fueled by
the advancements in mobile technology and miniaturization of computing chips, is poised
to revolutionize organizational computing one more time. Below we will summarize some
of the key technological trends that will influence the way organizations perform.
Miniaturization of computing resources
One important driver behind the current development of ubiquitous computing is minia-
turization of various computing resources. The computing power of microprocessors
has been doubled roughly every 18 months. Such dramatic improvements in computing
power have enabled companies to reduce the size of chips dramatically. As a result, we
can embed computing powers into tools and equipment, and even physical environments
to create intelligent tools and intelligent environments. Such intelligent environments and
tools can recognize the changing context and render appropriate computing services to
meet the needs.
Broadband network
Another important development in technology is the rapid penetration of broadband net-
work. Over the last decade, the bandwidth of communication network has been doubled
every 6 – 9 months. Not long ago, 28.8 kbps dial - up connection was considered a luxury.
ISDN, T1, and T3 connections were available only at selected organizations. Today,
through the use of DSL, cable modem, fiber optics, and satellite, increasingly large band-
widths in communication network are available.
The emergence of the internet as a communication backbone
In the past, organizations had to maintain two different types of communication net-
work: voice and data. Recent developments in network and digital signal technologies,
however, made it possible to exchange rich multimedia data over the internet network
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597 USE INFORMATION TECHNOLOGY FOR ORGANIZATIONAL CHANGE
without losing the quality of services. Consequently, individuals can conduct voice and
video conferencing over the internet. A key development in the internet is the develop-
ment of a new internet protocol, called IP V6 (internet protocol version 6). An important
significance of IP V6 is the large number of unique IP addresses that can be assigned.
Theoretically, the new addressing scheme allows up to 3.4 10
38
unique addresses. This
can be translated into approximately 5 10
28
for each of the 6.5 billion people alive in
2006. It will be more than enough to assign a unique IP address for everyone on earth
and many of the objects that they possess, not to mention their computers. This opens up
unlimited possibilities of connecting various tools and equipment to the network, which in
turn opens up many novel business opportunities.
Wireless technology
In the past, users had to go to a specific location in order to use computers. Increasingly,
however, computing services will follow users when and where they are needed. This is due
to the explosive growth and developments in wireless communication technologies and
mobile handheld devices. The speed of current wireless technologies easily exceeds the speed
limit of fixed line internet connection of just a few years ago. Furthermore, the devel-
opment of global positioning systems (GPS), sensors, and RFID (radio frequency iden-
tification) which can be embedded into small devices enables completely new ways of
organizing resources.
Mobile devices
The increasing miniaturization of computing resources and increasing mobility gave birth
to various small handheld devices that can perform powerful computing services. Various
mobile devices, including mobile phones, PDAs (Personal Digital Assistants), Blackberries
and portable media devices (e.g. iPods), provide convenient mobility with increasing com-
puting powers to the mobile users. These devices increasingly liberate users from the past
limitations of space and time so that they can use computers anywhere and anytime.
Organizational implications of technology trends
The aforementioned developments in various areas in information technology can be
summarized in three characteristics: mobility, digital convergence, and mass scale. First,
computing services have become increasing mobile, following where users are and provid-
ing services when it makes most sense. At the same time, we will see increasing conver-
gence toward digital signals. For example, so - called “ triple - play ” (combining broadband
internet, phone, and TV services) or “ quadruple - play ” (adding mobile internet) has resulted
from rapid digital convergence in media content, storage, and distribution mechanisms
which have created major disruptions in media and communication industries. By utiliz-
ing the quickly converging digital platforms, companies in these industries can and must
explore new media products and services that combine, for example, internet services and
mobile communications.
While the technological developments reviewed in this section are breathtaking and
impressive, managers need to think about how to leverage such new technological capabilities
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598 M ARYAM A LAVI AND Y OUNGJIN Y OO
for their organizations. They need to constantly ask the question “ Do we deliberately har-
ness the technology innovations? ” The developments in IT as reviewed here have created
new sets of opportunities to improve efficiency, transform the way they are organized, dis-
rupt competitive dynamics, and invent new business opportunities. Yet, organizations must
act deliberately in order to leverage these new capabilities (Zammuto, Griffi th, Majchrzak,
Dougherty, and Faraj, 2007 ). New technological capabilities cannot be simply plugged
into an existing organizational structure. Instead, organizations need to revisit long - held
rules and assumptions (Yoo, Boland, and Lyytinen, 2006 ).
FOUR WAYS IT CAN CHANGE ORGANIZATIONS
Studies of various forms of IT systems and applications in organizational settings
(Boland, Lyytinen, and Yoo, 2007 ; Harris and Katz, 1991 ; Keen, 1991 ) have estab-
lished that IT use in organizations can lead to four major categories of changes. These
categories consist of:
1. gaining large - scale efficiencies in business processes and transactions (Brynjolfsson, 1994 ;
Davenport, 1993 ; Hitt and Brynjolfsson, 1996 ),
2. enhancing communication, information access, decision making and knowledge sharing
(Alavi and Leidner, 2001 ; Jarvenpaa and Leidner, 1999 ; Kanawattanachai and Yoo,
2007 ; Lipnack and Stamps, 2000 ; Majchrzak, Rice, Malhotra, King, and Ba, 2000 ),
3. changing the basis of competition and industry structure to a firm’s advantage (Pavlou and
El - Sawy, 2006 ; Porter and Millar, 1985 ; Sambamurthy, Bharadwaj, and Grover,
2003 ; Sambamurthy and Zmud, 2000 ), and
4. exploiting new business models (Malone, 2004 ; Tapscott and Williams, 2006 ; Yoo, 2008 ;
Yoo et al., 2006 ).
These categories are not mutually exclusive and a particular firm can realize various
changes simultaneously through the effective use of various IT capabilities. Now, we will
discuss these four impacts of IT in more detail.
Gaining large - scale operational efficiencies
The use of information technologies for transaction processing systems and enterprise
resource planning systems can greatly enhance the operational efficiency of organiz ational
processes. The development of advanced information technologies (such as service -
oriented architecture and data warehouse) enabled the development of enterprise - wide
integration across different business functions. For example, enterprise resource planning
(ERP) is a highly integrated set of software modules designed to handle the most com-
mon business function transactions including general ledger accounting, accounts payable,
accounts receivable, inventory management, order management, and human resources.
At the heart of an ERP system is a single common database that collects data from and
feeds data into all the software modules comprising the system. When an information item
is changed in one of the software modules, related information is automatically updated in all
other modules. By integrating information, streamlining data flow, and updating information
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599 USE INFORMATION TECHNOLOGY FOR ORGANIZATIONAL CHANGE
across an entire business in a real - time mode, ERP systems can lead to dramatic pro-
ductivity and speed gains in operations. Consider the efficiency gains at IBM ’ s Storage
Systems division after the deployment of an ERP system. The division reduced the time
required for repricing its products from five days to five minutes and the time required to
complete a credit check from 20 minutes to three seconds (Davenport, 1998 ). Once Fujitsu
Microelectronics implemented an ERP system, it was able to close its fi nancial books in
four days (compared to eight days prior to the ERP system) and reduce order- fi lling time
from 18 days to two days.
Continuing developments of communication and network technology further accelerate
the trend toward tight integration in other areas. For example, in a healthcare setting, an
integrated electronic medical record (EMR) system can be an integral tool in reducing
the cost of healthcare service. Through the use of a centralized database, redundant and
inconsistent data entry for the same patient can be minimized. Vital information about
the patient can be easily shared between doctors, hospitals, insurance companies, and
drug stores, dramatically reducing the time and effort it normally takes.
Enhance decision making and communication
Decision making and communication constitute two core organizational processes. Complex
and challenging demands are placed on these two core processes in the current and emer-
gent business environments, particularly due to globalization and the increased volatility
of business and competitive environments.
Globalization has dispersed the operation of large firms across time and geography,
increasing the need for effective and efficient ways to communicate across distance. Change
in business and competitive environments in and of itself is not new (see Chapter 29 ,
this volume). After all, it has been said that change is the only constant. However, the rate
of change in today ’s economy has greatly increased, making it a major force to contend
with. The rapid rate of change increases decision - making complexity in several ways. An
increase in fl uctuations and uncertainty in the decision environment requires more sophis-
ticated analysis for developing, evaluating, and selecting alternatives. An increase in the
uncertainty and complexity of decision tasks further increases the information processing
requirements of the decision maker. Larger volumes of information from various sources
need to be assembled and organized more frequently. And finally, the rapid rate of change
combined with the increased complexity in analysis and information requirements in
decision environments increases the time pressure on decision makers. It is simple to see
that the traditional approaches to organizational decision making (manual analysis and
information management) and communication (face - to - face and same place, same time
modes of interaction) are insufficient. Information technologies such as decision support
systems and group support systems provide powerful capabilities in meeting the decision -
making and communication demands of modern organizations.
The decision support system (DSS) concept was first articulated by Gorry and Scott
Morton ( 1971 ) as an interactive computer- based system that enables decision makers to
use data and analytical models to solve unstructured problems. The objective of decision
support systems is not to replace the decision maker but to support and augment his/her
judgment and experience in order to improve decision - making effectiveness. Recent devel-
opments in database technology further enable decision makers to analyze large - scale
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600 M ARYAM A LAVI AND Y OUNGJIN Y OO
complex datasets with multidimensional decision - making criteria ( Turban, Aronson, and
Liang, 2006 ). These emerging DSS tools take advantage of sophisticated artifi cial intelligence
and multidimensional statistical techniques to detect hidden patterns and associations.
Furthermore, powerful visualization tools enable decision makers to analyze the data from
many different angles (Dillon and Information Management Forum, 1998 ). Leading com-
panies like Wal - Mart have been very successful in utilizing the huge volume of transaction
databases to gain new insights into customer behaviors. Organizations can deepen their
relationship with customers by leveraging better insight on customers ’ behavior (Cooper,
Watson, Wixom, and Goodhue, 2000 ). In information systems literature, several
researchers have articulated and investigated the relationship between DSS and organiz-
ational decision - making processes and outcomes. For example, Leidner and Elam ( 1995 )
in their study involving 91 users of decision support systems in 22 organizations found
that the use of DSS led to better decision - making outcomes as well as enhanced user
mental models. Thus, the information access and analytical capabilities offered by DSS
can bring about changes and improvements in decision - making processes and outcomes.
Information technologies, with their vast capacity for creating, transmitting, and stor-
ing messages, can also play a key role in the support of communication and collabor-
ation processes in organizations. An early effort to use information technology to support
organiz ational communication and collaboration processes led to the development of
group support systems (GSS). More specifically, GSS refers to a range of computer- and
communication - based capabilities designed to support work group interaction process-
es in order to enhance the performance of groups in organizational settings ( Jessup and
Valacich, 1993 ; Nunamaker, Dennis, Valacich, Vogel, and George, 1991 ). Dominant forms
of early GSS tools include electronic mail and computer conferencing systems, videocon-
ferencing, and electronic meeting systems.
There has been a major growth in the application of group support systems in organiz-
ations over the past decade. Consider the following examples and changes resulting from
applications of group support systems. Boeing experienced a return on investment of
681% with an approximately $ 100,000 investment (Briggs, 2004 ). Andersen Consulting uses
a Lotus Notes software system as a corporate backbone for the support of its knowledge
sharing (Yoo and Torrey, 2002 ). Notes is deployed to over 10,000 people worldwide and is
actively used for a variety of group functions, including e - mail, project management, and
information exchange and capture.
Early GSS research literature (Benbasat and Lim, 1993 ; Dennis, Wixom, and
Vandeberg, 2001 ; DeSanctis and Poole, 1994 ; Pinsonneault and Kraemer, 1989 ) point
out that, in general, three types of value - added organizational change can be expected
from group support system applications. These include: (1) reducing the effects of time
and distance barriers that constrain face - to - face interactions and communication, (2)
enhancing the timeliness, range, depth, and format of the information available to organ-
izational members, and (3) improving performance and effectiveness by reducing group
process losses (e.g. evaluation apprehension) through more efficient and structured group
interaction processes.
The continuing development of communication technology has enabled the emer-
gence of virtual teams as a viable form of organizing and coordinating group works
( Jarvenpaa, Knoll, and Leidner, 1998 ; Jarvenpaa and Leidner, 1999 ; Lipnack and Stamps,
2000 ; Piccoli, Powell, and Ives, 2004; Powell, Piccoli, and Ives, 2004 ). A virtual team is a
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601 USE INFORMATION TECHNOLOGY FOR ORGANIZATIONAL CHANGE
temporary, geographically dispersed, culturally diverse, and electronically communicating
work group ( Jarvenpaa and Leidner, 1999 ). Faced with global competitions and increased
need to draw on a more diverse pool of talents, organizations routinely use virtual teams.
Leading firms like Intel, Hewlett - Packard, and IBM rely on global virtual teams for their
engineering tasks (Lipnack and Stamps, 2000 ). These organizations use a barrage of com-
munication tools including electronic mail, intranet sites, groupware, and desktop video-
conferencing to support these virtual teams. In many cases, virtual teams allow individuals
to collaborate without permanently relocating, thus providing significant cost savings and
productivity gains (Malhotra, Majchrzak, Carman, and Lott, 2001 ). Over time, virtual
teams have become a pervasive and permanent reality of leading organizations.
Virtual teams present unique challenges to management, however. Some of these are
old and familiar management challenges of managing diverse teams, only in the con-
text of computer- mediated communications. Yet, at the same time, virtual teams present
unique management problems that stem from the fact that virtual teams are explic-
itly socio - technical entities. Over the last decade, a large body of literature on virtual
teams has emerged (Powell, Piccoli, and Ives, 2004 ; Wiesenfeld, Raguram, and Garud,
1999 ). Trust (see Chapter 21 ) (Jarvenpaa et al., 1998 ; Jarvenpaa and Leidner, 1999 ;
Kanawattanachai and Yoo, 2002 ), leadership (see Chapter 15 ) (Kristof, Brown, Simps,
and Smith, 1995 ; Pearce, Yoo, and Alavi, 2003 ; Yoo and Alavi, 2004 ), group composition
(see Chapter 16 ) ( Jarvenpaa et al., 1998 ), culture ( Jarvenpaa and Leidner, 1999 ; Massey,
Montoya- Weiss, Hung, and Ramesh, 2001 ), conflict (see Chapters 17 and 18 ) (Iacono
and Weisband, 1997 ), the appropriation of communication technology (Majchrzak et al.,
2000 ), and transactive memory (Cramton, 2001 ; Kanawattanachai and Yoo, 2007 ) are
among a few of the factors that have been identified as drivers of the success and failure
of virtual teams. These studies show that while virtual teams indeed face similar chal-
lenges that face - to - face teams have faced in the past, in many cases, the nature of those
challenges are quite unique and different.
Virtual teams often rely on electronic communication media as primary means to
communicate. These electronic media have different material characteristics that afford
different communication capabilities to teams, which in turn afford different social
dynamics in the teams (Fulk and DeSanctis, 1995 ; Zammuto et al., 2007). For example,
Kanawattanachai and Yoo ( 2002 , 2007 ) found that in virtual teams early com muni-
cation plays a much more critical role than their counters in a face - to - face setting, as
the early communication affects the emergence of swift trust and transactive memory
systems – meta - knowledge of knowing who knows what. These early trust and transac-
tive memory systems in virtual teams act more like a set of hypotheses that need to be
validated and sustained later through teams ’ actual interactions. This non - experience -
based, hypothetical nature of trust and transactive memory systems in virtual teams
are formed entirely through early communications via electronic media among team
members.
In summary, information technologies in the form of decision support systems and
group support systems can play a major transformational role in organizations through
their impact on the key organizational processes of decision making and communi cation.
Future developments in this area will depend not only on technological advances but also
on our understanding of and open - mindedness toward their applications and the result-
ing changes.
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602 M ARYAM A LAVI AND Y OUNGJIN Y OO
Change the competition and industry structure to your firm’s advantage
Information technology offers organizations opportunities to change the competitive
landscape by more effectively defining the dimensions of competition. The information
and knowledge intensity (Porter and Millar, 1985 ; Palmer and Griffith, 1998 ) of prod-
ucts and services has become an important element in defining competitive advantage.
Information intensity includes the amount of information that goes into the development
of the product or the service, the amount of information required by consumers to utilize
the product, and the amount of information required across the value chain to develop
and deliver the product or service. Firms have redefined the basis of competition by pro-
viding additional information regarding their products or in extending the information
content. Recent developments of ubiquitous computing technologies provide new ways
of embedding information and knowledge into products and services; such actions can
fundamentally disrupt the existing competitive dynamics.
Consider the case of Progressive Auto Insurance that opened up new competitive
opportunity to leverage its knowledge on customer behaviors. It conducted an experimen-
tal program in Texas using advanced telecommunication technologies that included GPS
and wireless communication tools. Progressive Insurance installed special equipment to
the customers ’ automobiles that were enrolled into a special program. The equipment
recorded the customer ’s driving pattern (time and location) and uploaded the information
to the company ’s data center at the end of each month. By combining the real driving
records from customers with its massive database of past history, Progressive Insurance
was then able to customize the insurance premium for each customer for the next month.
Customers who drove more safely got big discounts, while customers who drove danger-
ously saw higher premiums. This model offers a serious disruption to the auto insurance
industry given its cost structure. The profit margin of an insurance company is the differ-
ence between the insurance premium it receives from the customers and the incurred loss
to cover the accidents. The Progressive Insurance program attracted a pool of low - risk
customers from its competitors and drove out high - risk customers to them. This shift gave
signifi cant competitive advantage to Progressive Insurance.
The most significant change in industry structure came from the emergence of the
Internet as a means of conducting viable commerce transactions. The Internet caused
fundamental restructuring of highly fragmented industries through disintermediation.
Two perfect examples are the travel industry and the office products delivery industry.
Traditionally, the travel industry involved numerous independent travel agents presenting
travel options of providers such as airlines, hotels, and rental cars presented to the busi-
ness and leisure traveler. The advent of the Internet has signifi cantly changed the industry
structure, with providers providing services directly to customers via Internet sites. This
disintermediation of the travel agents is a major structural change for the industry.
Supply chain management has been a critical area for the use of information technol-
ogies to change the competitive dimensions. The early implementation of electronic data
interchange (EDI) in which supply chain partners exchange data on sales trends, inventory
replenishment, and in - store space allocation and management has been replaced with B2B
Internet commerce. Improvements in supply chain efficiencies have led to several signifi cant
competitive advantages for firms such as Wal - Mart and Dell, including improved bargaining
power over suppliers, reduced inventory costs, and enhanced in - store space management.
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603 USE INFORMATION TECHNOLOGY FOR ORGANIZATIONAL CHANGE
Finally, some organizations use advanced IT in order to fundamentally reshape inter-
firm relationships. Shared database, interconnected IT- enabled business processes, and
digitized tools can change the nature of interfirm relationships. Architecture, engineering
and construction (AEC), the world largest industry, is experiencing a fundamental reshap-
ing of interfirm relationships. The traditional practice of an AEC project begins with an
architect working with a client to create a set of paper drawings and detailed specifi cations,
which indicate the intention and form of what is to be built. The architect ’s drawings
leave it to the contractors and subcontractors to determine an appropriate method of
constructing the building. Contractors take the architect ’s drawings and use them as a
basis for creating their own “ shop drawings ” which show how they intend to fabricate
and install their part of the building. In preparing their shop drawings, contractors ask
architects questions by submitting RFIs (requests for information) or RFCs (requests for
clarification). In this traditional contractual context, architects and contractors need to be
collaborative, yet often maintain adversarial relationships, maintaining an arm ’s - length
relationship and sharing minimally required information.
Recently, however, firms in the AEC industry began forming much more collaborative
relationships among each other based on Building Information Management (BIM) systems
(Berente, Srinivasan, Lyytinen, and Yoo, 2008 ; Boland et al., 2007 ). Such collaborations
are based on information transparency and co - creation using a shared BIM platform.
With BIM systems, contractors do not create their own shop drawings based on archi-
tectural drawings. Instead, there is a central repository of data and model, with layers of
information that is created and consumed by different parties involved in the project. In a
typical AEC project, design conflicts between different trades are often found at the fi eld
site, which cause delay and budget overrun. With BIM systems, such design confl icts are
detected during the design stage and negotiated much earlier in the process, saving time
and money. A communication pattern which used to be linear and sequential in the past
now has become more dynamic and reciprocal using a centralized BIM platform. AEC
firms that use these technologies have become more competitive with their improved effi ciency
and their ability to build more challenging projects (Berente et al., 2008 ).
The use of IT to change competitive dynamics often involves identifying opportunities
for greater use of information in (1) the supply chain, (2) the description of the product
or its use, or (3) the after- sales support or service dimension. Industry structures can be
changed when the use of information technologies can (1) aggregate previously fragmented
markets, (2) replace existing channels at lower cost or improved convenience, (3) more
effectively bundle products and services, or (4) fundamentally alter interfi rm relationships.
Exploit new business models
The speed, scope, and ubiquity of information technologies offer the opportunity to
exploit entirely new business models in a variety of industries. The opportunity for fi rms
to enhance customer relationships by offering 24/7 (24 hours a day, 7 days a week) access to
purchasing, product information, and service offers an enhanced model for customer
convenience and connection. This capability has influenced both Internet - based retailers
as well as traditional retailers in the provision of customer convenience (Palmer, 1997 ).
The Internet has dramatically increased the marketing activities available to many
organizations. While the Internet has helped organizations to gain effi ciency, to improve
c32.indd 604 6/17/09 3:27:48 PM
604 M ARYAM A LAVI AND Y OUNGJIN Y OO
communication and decision making, and to create new competitive dynamics, its most
important impact was the creation of new business models. Take the most well - known
Amazon.com as an example. The basic idea of using the Internet to sell millions of books
on the Internet without relying on any type of physical direct interactions with the cus-
tomers was a novel idea at the time it was first introduced. Other online companies such
as eBay.com and Priceline.com also leveraged the Internet in order to implement a unique
and novel business model. In the case of eBay, it uses a large community of passionate
buyers and sellers, combined with an auction pricing model, to radically outsource pro-
curement, pricing, sales and fulfillment of products that are sold (Malone, 2004 ). In the
case of Priceline.com, it uses a unique “ reverse auction ” model so that sellers will bid for
the price set by potential buyers in travel - related products. In these cases, the Internet pro-
vides these organizations an opportunity to present information regarding their products
and services to both customers and suppliers. With the potential to reach global markets
with product and service information as well as the ability to provide user interaction with
the website, these companies were able to tap into so - called “ long - tail ” markets that were
not practical in the past (Anderson, 2006 ).
The Internet also opens up the possibility of “ open innovation ” (von Hippel, 2005a ,
2005b ). Consider the examples of Linux and Apache software, two of the most popu-
lar and reliable software systems that run the Internet. Tens of thousands of volunteer
programmers around the world worked together to build these software systems with
minimum hierarchical control (O ’ Reilly, 1999 ; von Hippel and von Krogh, 2003 ). Open
source developers use electronic communication and coordination tools in order to main-
tain a sense of social community and to coordinate their actions (Stewart and Gosain,
2006 ). This allows them to organize and source globally distributed programming knowl-
edge and skills into exceptionally complex software products. The success of open forms
of digital innovation is not limited to software. Companies like General Electric and
Procter and Gamble have now started to turn to Internet - based innovation communities
to find new ideas and solutions (Chesbrough, Vanhaverbeke, and West., 2006 ; von Hippel,
2005a ). Such open innovation represents a novel business model for many organizations
that are looking for new avenues for innovations.
Recently, companies like General Motors, IBM, and Sears began experimenting with
Internet - based virtual reality. Emerging platforms like Second Life ™ provide relatively
scalable and inexpensive platforms to create virtual reality. Unlike conventional virtual
reality technology that required expensive specialized hardware, software and facility, the
new generation of virtual reality technologies use the Internet to reach millions of users.
Furthermore, compared to conventional websites, these virtual reality platforms provide
a much more engaging user interface. Individual users can create their own avatar which
can navigate through the three - dimensional terrain in the virtual world. These avatars
mimic human behaviors creating more intimate social context for interactions. Leveraging
such a rich user interface, some companies like IBM are using virtual reality to add social
dimensions to its global operations. Other organizations use virtual reality to introduce
and/or experiment their new product ideas. For example, many consumer goods manu-
facturers are using virtual reality to let consumers experience their products virtually, even
before those products are introduced to the real world market.
Finally, embedding of software - enabled capability into products and services enables
organizations to invent new products and services (Yoo, Boland, and Lyytinen, 2008 ).
c32.indd 605 6/17/09 3:27:49 PM
605 USE INFORMATION TECHNOLOGY FOR ORGANIZATIONAL CHANGE
Many products that used to be non - digital are now increasingly composed of fully digital
components, enabling the products to interact with other local digital devices, or to use
the Internet to control behaviors or learn about the environment in which they operate.
This offers organizations a way to differentiate customer or user experience. For example,
the widespread availability of GPS (Global Positioning Systems) functions in digital cam-
eras and mobile phones, when combined with comprehensive digital maps and sensors in
surrounding buildings, cars or clothing, can spur a stream of novel services and products
that will connect previously unconnected experiences and create a new “ virtual ” physical
world. By embedding digital RFID chips into running shoes, Nike and Apple were able to
integrate the iPod into running shoes, creating a novel product that never existed before.
In summary, the development of IT offers four different ways to invent new busi-
ness models: (1) organizations can use the Internet to reach out to “ long - tail ” markets;
(2) organizations can draw on the power of crowds by employing open innovations;
(3) organizations can leverage increasingly powerful virtual reality; and (4) organizations
can invent novel products and services by embedding software - enabled capabilities into
products and services.
BEWARE OF IT IMPLEMENTATION ISSUES
Considering the prevalence of IT applications and the large and growing investments in
them in modern organizations, one might expect a consistently positive set of outcomes
associated with IT initiatives. This, however, is not always the case. Both research and
practice have shown that due to implementation failures, IT may not lead to the planned
or expected organizational changes described above. One form of implementation
failure involves the cancellation of an IT project before the completion and installation
of the system. For example, in 1995, 31% of large IT projects were canceled in US com-
panies prior to their completion for an estimated total cost of $ 81 billion (Robey and
Boudreau, 1999 ).
Another form of IT implementation failure involves situations in which the IT system is
completed and installed, but the targeted organizational users resist the system, or do not
use it in the intended way. An interesting example is provided by Robey and Boudreau
( 1999 ) and involves a system originally described by Kraut, Dumais, and Koch ( 1989 ).
One of the goals of the system, a computerized record - keeping system, was to enhance
the operational efficiency of the organization by reducing the opportunities for social
interactions among employees during working hours. After the system installation, although
the employees were more isolated, they “ invented ” a new and unintended way of using the
system for social interactions. They used a memo field designed for capturing customer
comments for passing messages back and forth among themselves, undermining the
expected organizational effi ciency gains from the IT system.
Thus, the successful implementation of IT systems is a prerequisite for realizing the
planned and expected changes associated with these systems. The researchers in the infor-
mation systems fi eld have identified several factors that seem to contribute to the imple-
mentation success of IT systems. These factors include top management support and commitment,
user involvement in the planning and design of the IT system, and user training in the use of IT (Alavi
and Joachimsthaler, 1992 ; Lucas, Ginzberg, and Schultz, 1991 ). Top management support
c32.indd 606 6/17/09 3:27:49 PM
606 M ARYAM A LAVI AND Y OUNGJIN Y OO
and IT commitment are prerequisites for the success of all forms of organizational change
initiative, including IT - centered change. This is partly due to the need for top management
support and commitment for garnering organizational resources required for IT imple-
mentation. Furthermore, top management support is shown to influence the level of
individual user personal stake in the IT implementation success (Lucas et al., 1991 ). The
strength of the relationships between user involvement and training and IT implementa-
tion success was established through the meta - analysis study of Alavi and Joachimsthaler
( 1992 ). This finding is consistent with the views presented in normative models of organiz-
ational change (e.g. Kolb and Frohman, 1970 ) and the diffusion of the innovation model
(Cooper and Zmud, 1990 ) of IT implementation. These models highlight the importance
of involvement and training as the means to create a favorable and accepting environment
in which to bring about the IT- centered change.
Other researchers investigating IT implementation issues have suggested that the
above- mentioned factors seem to be necessary, but not sufficient conditions for the success of
large - scale IT implementations (Markus and Robey, 1988 ; Robey and Boudreau, 1999 ).
According to these researchers, organizational change associated with large - scale IT appli-
cations is complex and should be analyzed at different levels including individual, group,
and departmental as well as organizational and strategic levels. Consider the enterprise
resource planning (ERP) systems described earlier in the chapter. At the operational level,
these systems can lead to highly integrated, coordinated, and efficient core operational
processes. These benefits are achieved by imposing generic and streamlined workfl ow
logic encoded in the software on the organization. This impact at the operational level
may restrict the latitude of authority at the individual worker level. On the other hand,
the standardization of workflow and information items across departments may empower
cross - functional teamwork in the organization. At the same time, the company ’s move
toward generic and standardized processes may have a negative impact on the competi-
tive positioning of the firm, if customized processes are a source of competitive advantage
in the fi rm. For example, Dell Computer found that its ERP implementation would not fi t
its new, decentralized management model (Davenport, 1998 ).
In summary, to enhance the success of IT implementation and to realize the desired
organizational changes, IT impacts should be considered and planned for at multiple
levels of analysis simultaneously. Failure to do so may lead to negative and unexpected
consequences.
CASE STUDIES
Implementing ERP systems at NASA
NASA was established in 1958 with the passage of the National Aeronautics and Space
Act. It succeeded the National Advisory Committee for Aeronautics (NACA) by adding
the development of space technology and inherited three major research laboratories –
Langley and Ames aeronautical laboratories and Lewis Flight Propulsion Laboratory – along
with two smaller test facilities. Soon after, other centers and facilities were added.
Currently, there is one central headquarters and 10 fi eld centers for research and spacefl ight
control (including the Jet Propulsion Laboratory which is managed by Caltech under a
contract arrangement) around the USA.
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607 USE INFORMATION TECHNOLOGY FOR ORGANIZATIONAL CHANGE
From the beginning, each center was established in order to meet unique challenges
in fulfilling the mission of the Agency. Over time, each center established its own unique
competencies, culture, organizational structure, and technical infrastructures. The centers ’
unique technical capabilities and foci of their research and development have served the
Agency ’s ambitious purpose of pursuing complex human and robotic space exploration
projects. Centers have established worldwide reputations in their own unique areas for
their technical excellence. Over time, however, this has resulted in “ stove- piped ” information
systems and organizational processes at each center and for different functional needs. Each
functional area built their legacy systems in order to meet their idiosyncratic needs. Furthermore,
similar capabilities and knowledge resources were established in different centers, resulting in
redundant investment. Different administrative and organizational procedures have made
it difficult for the individuals within NASA to identify knowledge resources and capabilities
distributed throughout the Agency. Even if they identify the potentially useful knowledge
resources, differences in organizational rules, accounting standards, and information tech-
nology have made it difficult to collaborate across the center boundaries. As documented
in a Columbia Accident Investigation Board (CAIB) report, the lack of integrated infor-
mation systems and organizational practices caused major challenges in coordination and
control across the Agency.
To address these challenges, NASA began working on an integrated fi nancial management
system in 1987 after the GAO found that NASA’s accounting and fi nancial information sys-
tems “ constitute a material weakness of the Agency. ” The attempt to design and imple-
ment an agency - wide integrated system, officially named NASA Accounting and Financial
Information Systems (NAFIS), failed after eight years and more than $ 90 million. After
the failure of the NAFIS project, NASA decided to implement a “ commercial off - the - shelf ”
(COTS) software system. In 1995, NASA officially launched the first iteration of the
IFMP and hired KMPG Peat Marwick to customize a system that they had implemented
elsewhere and implement it. Yet, NASA and KPMG agreed to cease the work in early
2000 as KPMG continued to fail to meet the major milestones.
In February 2000, NASA started its third attempt to integrate its fi nancial management
systems. NASA established an Integrated Financial Management Program (IFMP) and
decided to implement the industry - leading product SAP and hired Andersen Consulting
and IBM as the technical implementation and change agent consulting fi rms, respectively.
NASA appointed new leadership of the project in February 2000 and redesigned the
project. Marshall Space Center was selected as the lead center where most technical imple-
mentation teams are based, and Glenn Research Center was chosen as the first phase site.
The vision of the IFMP program is to build a modern, leading edge business system that
will provide the management information needed for mission success, meet the information
needs of internal and external customers, support compliance with external regulatory
guidance, and promote standardization and integration of business processes and systems
across NASA. Specifically, the IFMP aims at delivering five business objectives:
◆
Provide timely, consistent and reliable information for management decisions;
◆
Improve NASA’s accountability and enable full cost management;
◆
Achieve effi ciencies and operate effectively;
◆
Exchange information with customers and stakeholders;
◆
Attract and retain a world - class workforce.
c32.indd 608 6/17/09 3:27:49 PM
608 M ARYAM A LAVI AND Y OUNGJIN Y OO
The first wave implementation of the SAP Core Financial Module at Glenn went live
in October 2002. The rest of the Agency went live with financial core in fall of 2003.
Although the system officially went live in October 2002 at Glenn, there were continuing
training, minor upgrades, and fixes throughout the duration of the data collection.
Subsequently, NASA implemented budget formulation, an updated version of fi nancial
core, project management, and asset management modules. Currently, the project is
combined with the e - government initiatives.
Initial implementation of SAP, however, was marred with technical and organizational
challenges. Scientists and engineers at NASA were frustrated with the new system as its
complexity quickly overwhelmed them. Given NASA’s unique mission and organizational
structure, many NASA employees found that SAP does not provide adequate reports and
lacks flexibility in managing large complex projects. Furthermore, despite the implemen-
tation of SAP, PricewaterhouseCoopers, the agency ’s auditor, issued a disclaimed opinion
on NASA’s 2003 financial statements. PricewaterhouseCoopers complained that NASA
couldn’t adequately document more than $ 565 billion in year- end adjustments to the fi nan-
cial statement accounts, which NASA delivered to the auditors two months late. Because
of “ the lack of a sufficient audit trail to support that its financial statements are presented
fairly, ” concluded the auditors, “ it was not possible to complete further audit procedures
on NASA’s September 30, 2003 financial statements within the reporting deadline established
by [the Offi ce of Management and Budget]. ”
NASA says blame for the financial mayhem falls squarely on IFMP. NASA’s CFO,
Gwendolyn Brown, says the conversion to the new system caused problems with the audit.
In particular, she blames the difficulty the agency had converting the historical fi nancial
data from 10 legacy systems – some written in COBOL – into the new system, and recon-
ciling the two versions for its year- end reports. Brown says that despite the diffi culties with
both the June 30 quarterly fi nancial statement preparation and the year- end close, the sys-
tem is up and running, and she has confidence in the accuracy of the Agency ’ s fi nancial
reporting going forward. “ It is working, ” says Brown, who was confirmed as CFO in
November 2003, “ and we are moving forward to ensure that we ’ re ready to go to the moon,
to Mars, and beyond, fi nancially. ”
Large - scale IT - enabled organizational change at Federal Express
Federal Express, located in Memphis, Tennessee, is one of the leading logistic integrators
in the world and is famous for its commitment to timely delivery and customer service. It
is currently the world ’s largest express transportation company and part of the Federal
Express Corporation. Federal Express has annual revenues of US $ 15 billion dollars and
138,000 employees. It operates over 650 airplanes and employs over 45,000 courier veh-
icles worldwide. It handles approximately 3.5 million packages per day but during peak
times the number of packages flowing through the system is significantly greater. The
company offers over 40 different types of delivery services and has over 200 different
delivery services. Combined with thousands of different routing possibilities and fl uctuating
seasonal volumes, the package handling system is enormously complex.
Federal Express has utilized information technology to gain large - scale effi ciencies in
business processes and transactions, enhance communication, expand information access and
decision making, change the basis of competition and industry structure to its advantage,
c32.indd 609 6/17/09 3:27:50 PM
609 USE INFORMATION TECHNOLOGY FOR ORGANIZATIONAL CHANGE
and constantly exploit new business models. Because Federal Express operates in an indus-
try with low profit margins and intense price competition, the company is very sensitive to
the costs incurred due to incorrect information, poor coordination, or inappropriate
incentives. Therefore, its use of information technology in the deployment of its core
operations has always been aggressive. Federal Express has always been an industry leader
in adopting new technological solutions.
As technology continues to develop, Federal Express is trying to transform itself once
again. Utilizing an increasingly powerful communication network, Federal Express is con-
stantly trying to push its intelligence toward the edge of the organization. The PowerPad
solution is Federal Express ’s next generation computer support for courier tasks and work
processes. It replaces and expands their current courier support technology that employs
the DADS (Digitally Assisted Dispatching System) and the SuperTracker handheld com-
puter that operates on an analog wireless network. The new PowerPad platform integrates
a specially built and designed handheld computer, a Bluetooth enabled Personal Area
Network (PAN) solution – which integrates DADS, a printer (called ASTRA), a smartphone
(running broadband wireless), a barcode scanner, and associated technologies (called Electronic
SuperTracker) – and a headset unit.
PowerPad is expected to influence couriers ’ operations on their customer premises,
while driving in the van, and also during their stay in the pick - up centers (stations). Federal
Express envisions that the introduction of the PowerPad technology will accomplish the
following: (1) reduce the time couriers need to perform package handling tasks; (2) enable
couriers to carry out expanded operations at the customers ’ premises; (3) reduce depend-
ency on manual tasks and other system entities during pick - up; and (4) reduce duplicate
data entry. The new system minimizes the couriers ’ need to return to their van during any
pick - up or delivery operation and gives near instantaneous connectivity, which allows the
completion of any initiated transaction on the spot. It enables almost real - time planning
of routes and load schedules across the whole Federal Express network. The systems also
embed much of the operational knowledge and intelligence required to allocate picked
packages to correct service categories, thereby reducing routine and data capture errors,
while also providing better feedback to customers about how their packages will be handled.
The PowerPad system is expected also to improve the couriers ’ mobility and service
within their routes by offering them nearly instantaneous and transparent access to differ-
ent information services at the station level (or higher), including communications with
other couriers. The system is also useful for other information sharing purposes such as
distributing and maintaining delivery guidelines, providing remote support for exceptional
situations, and so on.
The PowerPad system is a typical example of a new set of emerging applications that
draw upon multiple ubiquitous computing concepts and technologies that help embed
computing intelligence with a mobile workforce. All major logistic firms are currently roll-
ing out similar applications. Associated “ location - aware ” ubiquitous computing systems
will eventually become standard in organizations providing transportation, maintenance,
and support services. More generally, these systems can be expected to have a major
impact on the everyday tasks of a distributed workforce as they will be able in the future
to integrate flexibly with other ubiquitous computing technologies such as voice - activated
tasks, wearable components in uniforms, radio technologies that enable “ smart” environments
and packages, or Bluetooth - enabled glasses or heads - up screens.
c32.indd 610 6/17/09 3:27:50 PM
610 M ARYAM A LAVI AND Y OUNGJIN Y OO
Finally, multiple external networks provide an opportunity for Federal Express to
enhance the logistics chain as well as its customer relationships, changing the nature of
competition within the online delivery industry. Federal Express integrated its data systems
with those of its customers. Allowing customers to track packages not only reduced internal
costs to Federal Express, but more importantly linked the Federal Express database to
those of its customers. This linkage allowed Federal Express customers to better serve
their own clients, increasing customer loyalty and reducing the likelihood of switching to
another provider (Goldman, Nagel, and Preiss, 1995 ). This use of the Internet resulted in
improved customer satisfaction and involvement, while reducing costs through the elimi-
nation of call centers. In addition, Federal Express information technology capabilities
include a knowledge base of expertise in shipping, customs brokerage, and governmental
regulations, which supports the globalization of their business and is value added infor-
mation for Federal Express customers.
Over time, Federal Express has extended its expertise in information technology appli-
cations to position itself as a logistics integrator. This new business model goes beyond
that of package delivery to develop warehousing, notification, tracking, and packaging
technology for its customers. This enhanced business model also includes multiple new
revenue streams from each of the value adding activities. This model is particularly attrac-
tive given the development of Internet - based selling of physical products requiring full
logistics support. An example is the Federal Express alliance with Laura Ashley. Under
this agreement, Federal Express took over the warehouse and distribution activities. This
provides a global distribution network for Laura Ashley and firmly established Federal
Express as a logistics provider.
CONCLUSION
Information technology can serve as a significant catalyst for organizational change.
The impact of information technology can improve operating efficiencies across the
organization, improve the communication and decision - making processes, fundamen-
tally alter competitive dynamics, and invent new business models. Emerging infor-
mation technologies in particular offer radically different new products and services.
Implementation of technology continues to be a challenge for all companies. In
the past, organizations saw technology implementation as a discrete occasional task,
only occuring during the time when the organization installed new technology or
upgraded the existing technology. However, in the current organizational environ-
ments where the technology development cycle has been radically reduced and the
impact of information technology in organizations is far more pervasive, organizations
cannot treat technology implementation as discrete periodic challenges any more.
Furthermore, the impact of success and failure of information technology is often
felt far beyond the boundary of an organization’s information systems department.
The tremendous potential for improvements through information technology is
only fully realized when existing organizational processes, incentives, and culture
are reflected in the implementation process. Successful use of information technology
involves strong organizational commitment and a clear identification of the role
information technology will play.
c32.indd 611 6/17/09 3:27:50 PM
611 USE INFORMATION TECHNOLOGY FOR ORGANIZATIONAL CHANGE
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EXERCISES
Discuss risk factors associated with large - scale IT implementation and
develop an effective mitigation plan (30 min)
1. Discuss the organizational and institutional background of NASA. Have students
study NASA’s history ahead of time. Alternatively, you can give a short lecture on
NASA’s history and organizational structure. (5 min)
2. Identify various risk factors in implementing ERP at NASA.
(a) Divide the class into groups of four. Have students identify technical, organiz-
ational, cultural, and institutional risks associated with ERP implementation. (10 min)
(b) Groups report their fi ndings. Using a board, develop a comprehensive list of risk
factors for large - scale IT projects in organizations. (5 min)
3. For each major risk factor identified, discuss effective risk mitigation strategies. (10 min)
Discuss potential benefits of large - scale IT implementation based on
the Federal Express case (30 min)
1. Discuss Federal Express ’s competitive strategy and some of the key threats and
opportunities. (10 min)
2. Discuss the future potential of PowerPack.
(a) Have students develop a concrete business scenario where Federal Express can
engage in a new strategic alliance with its mobile computing platform in small
groups. (10 min)
(b) Have groups report back. As groups make their presentations, explore pros and
cons of their ideas. (10 min)
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33
Make Management Practice
Fit National Cultures
and the Global Culture
MIRIAM EREZ
This chapter focuses on the interface between cultures that takes place in the global work
context. This change in focus is driven by the changes in the work environment, as more
and more people around the world work for multinational and global organizations that
cross geographical zones and cultural borders.
Organizational behavior principles should take into consideration the context in which
they are implemented and specifically the work context that is shifting from local to global.
This global context is characterized by economic interdependence across countries, a free
flow of capital, and goods, knowledge and labor moving across national and geographi-
cal borders (Erez and Shokef, 2008 ; Govindarajan and Gupta, 2001 ). It is not very dif-
ficult to understand why Thomas Friedman used the metaphor of the “ World is Flat” as
the title of his recent book, in which he reviewed the factors that are flattening the glo-
bal business environment, including historical, technological, and communication issues
(Friedman, 2005 ).
Yet, is the world really flat and are managers developing identical or nearly identical
principles for managing organizations and people around the world? The answer, as reported
both by practitioners and researchers, is “ no. ” Cross - cultural differences in values, norms,
and accepted modes of behaviors still exist and they differ across cultures.
The next question is, therefore, how do managers cope with the paradox of operating
in the globally flat business world and at the same time, also manage culturally diverse
employees working in culturally diverse subsidiaries and business units? The aim of this
chapter is to answer this question by providing some principles to serve as guidelines for
managers in navigating between the macro level of the global, flat culture and the uneven
level of diverse national cultures lying underneath.
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616 M IRIAM E REZ
FROM LOCAL TO GLOBAL WORK CONTEXTS
For many years, the dominant theories of organizational behavior were mostly Western/
American, generated and validated on Western samples of managers and employees, working
in Western organizations.
In the late 1980s, the fierce competition between Japan and the USA called attention
to cultural issues. During this period, articles in business papers reflected fear of Japan,
attempting to understand how Japan was growing, why it was dangerous, and what could
be done about the supposed threat to Western hegemony (Smith, 1990 ). Over the years,
an increasing number of American managers found themselves negotiating with the
Japanese, marketing their products in Japan, offering services to foreign customers, and
managing operations outside their home countries. As a result, the popularity of guidebooks
on how to do business with the Japanese and other foreign countries grew. The demand for
such books testified to the fact that managers recognized their lack of knowledge and
competence in managing across cultural borders.
By the late 1990s, the competition between companies situated in different cultures
turned from conflict to cooperation in the form of international mergers and acquisitions,
joint ventures, and business alliances. A wedding ceremony becomes a common metaphor
for international mergers, with a question mark overhanging these unions: will they last,
or unravel?
Cooperation rather than competition requires a better understanding of one ’s inter-
national partner. It is not enough to merely know of one’s collaborator but rather the need
Individual
Cultural self-
representation
Group Culture
Organizational Culture
National Culture
Global Culture
Top
Down
Bottom
Up
Cultural
Interface
Global Integration
and Interpersonal
Responsiveness
FIGURE 33.1 A multi - level model of culture (based on Erez and Gati, 2004)
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MAKE MANAGEMENT PRACTICE FIT NATIONAL CULTURES AND THE GLOBAL CULTURE 617
for understanding cross - cultural differences and similarities is becoming increasingly cru-
cial for effective international partnerships and their managers.
However, recognizing and accepting cultural diversity is necessary, but not suffi cient
for operating across cultural borders. What is needed is a shared meaning system that
enables players in the global work context to communicate and understand each other,
so there is a basis for collaboration and coordination (Gelfand, Erez, and Aycan, 2007 ).
This shared meaning system reflects the emergence of a global work culture. The global
work culture has emerged as the most macro level of culture which subsumes the nation-
al, organizational, group, and individual levels of cultural values nested within each other,
portraying a multi - level model of culture (Erez and Gati, 2004 ), as shown in Model 1,
Figure 33.1 .
THE GLOBAL WORK CULTURE
Social scientists drew attention to the dissemination of three socio - cultural values
around the world: rationalization, professionalization and actorhood (Drori, Jang, and Meyer,
2006 ). Rationalization pertains to systemization, standardization, and routinization of
actions. Rationalization facilitates comparability across cultures, as evident by the global
rating systems of economic, educational, and government institutions. Comparability
enhances global competition across all institutional domains. Organizations compete for
their relative ranking: business companies, as well as national educational systems, univer-
sities, business schools, legal systems, etc. make every effort to be ranked at the top of their
respective world list. Furthermore, rationalization enforces universal criteria for profes-
sionalism, pertaining to universal knowledge, and expertise that are necessary for becom-
ing a certified professional and a member of local professional organizations, recognized
by international professional organizations. Finally, globalization also diffuses the value of
actorhood, which champions the proactive individual, with the capacity and motivation
for taking a proactive stand and control over him/herself. This value has been globally
disseminated by educating for democracy around the world. Such global values provide
the infrastructure for the development of a global organizational culture, common to all
organizations operating in the global work context.
Values are instrumental for adaptation to and/or changing one ’s environment. The
global work environment is known to be geographically dispersed and culturally diverse,
highly competitive, dynamic, and uncertain. Paradoxically, while this global environment
emerges beyond national cultures it also consists of diverse cultures representing the mul-
tiple subsidiaries and business units of the global organization. Unlike managers operat-
ing in local organizations, nested within one culture, managers of global organizations
operate in a complex environment, where they need to safeguard the global integration of
the companies ’ operations; on the other hand, alongside this global integration, they must
maintain local responsiveness to their diverse subsidiaries and business units, nested within
diverse local cultures. The global context determines the principles that should guide
managers operating in the global work context. Below is a set of subprinciples for the
global manager, as summarized in Figure 33.2 .
As evident, the core principle relates to the interplay between global integration and
local responsiveness (Kostova and Roth, 2002 ).
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618 M IRIAM E REZ
Subprinciple #1
Globally implement task-oriented managerial practices
Locally implement interpersonal-oriented practices
Identify the cultural
Subprinciple #2
Subprinciple #3
Understand yourself and the
characteristics of the countries
cultural values you hold
with which you conduct business
Subprinciple #4
Implement employee-related
management practices that fit in
with the cultural values
FIGURE 33.2 The four principles of global management
The first subprinciple: Globally implement task - oriented managerial practices
and locally implement interpersonal - oriented practices
Research has demonstrated that managers should differentiate between two groups of
values and practices: those pertaining to the execution of tasks and operations, and those
pertaining to interpersonal relationships with employees, peers, superiors, and customers
(Berson, Erez, and Adler, 2004 ; Erez and Shokef, 2008 ).
Task - oriented practices enable managers to cope with the highly competitive global
work environment, where the competition is on market share, customers, new products,
and prices. To cope with such demands, managers of multinational and global organiz-
ations should uniformly share the values of competitive performance orientation and customer
orientation. They should agree on the importance of their task - related managerial roles
of planning and coordination, and initiating changes and innovation, wherever on the
globe they manage business units.
On the other hand, interpersonal practices pertain to the relationship between man-
agers and subordinates, peers, superiors, and customers. These relationships should be
tuned to the diverse local cultural values and norms. Therefore, interpersonal practices
should be loosely implemented, respecting the diverse local cultural values. To maintain
the fit between interpersonal - related management practices and local cultures, managers
need to identify the variations in cultural values.
The second subprinciple: Identify the cultural characteristics of
the countries with which you conduct business
Managers and employees in different cultures bring to their workplace their cultures ’
behavior codes and norms. These norms and cultural values shape the organizational
processes and managerial practices. Therefore, different managerial practices, in particular
the relational ones, are implemented in different parts of the world within the same global
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MAKE MANAGEMENT PRACTICE FIT NATIONAL CULTURES AND THE GLOBAL CULTURE 619
organization. For example, in individualistic cultures, such as that of the USA, the selection
procedure of new employees is based on his or her personal records. In collectivistic cul-
tures, such as that of Mexico, recommendations by family members, who already work
for the company, serve as an important criterion for selecting new employees. In the USA,
promotion to higher managerial levels is based on personal achievements, as they appear
in an employee ’s performance appraisal records. However, in collectivistic and hierarch-
ical cultures such as Japan, seniority plays a major role in promotion decisions. Payment
based on results constitutes a greater part of Americans ’ compensation packages com-
pared to those in Europe. In European countries, flat salaries are more common than in
the USA. The compensation package of American managers includes a large portion of
stock options, whereas this is less common for local European and Far Eastern managers.
Explicit feedback on performance is highly valued in Western countries, whereas in the
Far East implicit feedback is the norm, and explicit feedback is not acceptable. Explicit
feedback, if negative, violates the important value of face saving; if positive, it violates
the important value of collectivism and the sense of being part of the group rather than
being unique and different than others.
There are so many different codes of behavior and variations of management practices
that relate to employees and interpersonal relationships that they cannot all be described
in the “ how to ” books. Managers, therefore, should recognize the key cultural values that
determine which practices will be positively evaluated by employees, enhancing their sense
of self - worth and well - being, and consequently motivating them to stretch their goals
(see Chapter 9 , this volume) and improve their performance (Erez and Earley, 1993 ).
Managerial approaches that are at odds with prevailing cultural values are unlikely to be
effective. Since cultures differ in the values they endorse, people from these cultures often
interpret the same managerial practices quite differently than a manager coming in from
the “ outside ” would expect. Identifying the core cultural values will enable managers to fi t their
management practices to cultural context.
Culture can be defined as a shared meaning (value) system (Schwartz, 1992 ; Shweder
and LeVine, 1984 ). In metaphorical terms, culture is the software of the mind (Hofstede,
1991 ). Culture shapes the core values and norms of its members. These values are trans-
mitted from one generation to another through social learning processes of modeling
and observation, as well as through the effects of individual actions (Bandura, 1986 ).
Homogeneous societies form tight cultures, and their norms and values, are closely shared
by most members of the society. Societies consisting of subgroups with dissimilar norms
and values form loose cultures (Triandis, 1989 ; Gelfand, Nishii, and Raver, 2006 ).
Cultures differ in their content components. The two values that depict most of the
variance among cultures are: collectivism versus individualism, and power distance.
Individualism – collectivism signifies the level of inter- relatedness among members of one
culture (Hofstede, 1991, 2001 ; Brewer and Chen, 2007 ). Collectivism means preferring
to work in teams, subordinating personal goals to group goals, being concerned about the
group integrity, and having an intense emotional attachment to the in - group. In contrast,
individualism emphasizes personal autonomy and independence, adherence to personal
goals, and less concern and emotional attachment to the in - groups (Triandis, Bontempo,
Vilareal, Masaaki, and Lucca, 1988 ). The USA, Australia, and England are highly
individualistic cultures, whereas South America, Pakistan, Korea, Japan, and Taiwan are
highly collectivistic.
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620 M IRIAM E REZ
Power distance reflects the level of equality in the society. High power distance means
low equality in the society and a clear power structure in organizations. Employees in such
cultures know their place in the organizational hierarchy, and there are clear status sym-
bols that differentiate between employees of different organizational levels. On the other
hand, in low power distance cultures, employees feel free to disagree with their superiors
and to express their ideas openly. Malaysia, the Philippines, Arab countries, India and
some of the South American countries are known for their high level of power distance.
In contrast, Israel, Scandinavia, and New Zealand are known for their low levels of power
distance. Recently, a group of more than 80 researchers, headed by Robert House from
the Wharton School, joined together to conduct the Globe Study in 60 different countries.
(House, Hanges, Javidan, Dorfman, and Gupta, 2004 ). This study assessed differences
and similarities in cultural and organizational values, as well as in preferences for leader-
ship characteristics. Table 33.1 depicts the cultural values of collectivism and power dis-
tance in a sample of eight countries that includes the USA, England, West Germany, East
Germany, Russia, Finland, Japan, and Israel.
The results demonstrate that in this sample, East Germany and Russia are the countries
with the highest level of power distance, and Israel is the most egalitarian country.
Similarly, the USA is the most individualistic culture, and Japan and Russia have the most
collectivistic cultures.
Three additional values that help differentiate cultures are: uncertainty avoidance,
masculinity/femininity, and future time orientation.
Uncertainty avoidance reflects the extent to which members of the society feel threat-
ened by uncertain or unknown situations. High levels of uncertainty lead to anxiety.
Organizations that seek to avoid uncertainty have formal rules and regulations, clear task
definitions, and low tolerance for deviation from their rules and norms. In opposition,
organizations with a high tolerance for uncertainty are less formal, more fl exible, and
allow for higher levels of heterogeneity in norms and behavior. Cultures with high levels
of uncertainty avoidance are: Switzerland, Sweden, and Singapore; cultures with low
levels of uncertainty avoidance are Greece, Venezuela, and Russia.
Masculine versus feminine cultures – the former pertains to societies in which social gen-
der roles are clearly defined (i.e. men are supposed to be assertive, tough, and focused on material
Table 33.1 Differences in cultural values across selected countries ( based on House
et al., 2004)
Collectivism Power distance Uncertainty avoidance
England 4.08 (C) * 5.15 (B) 4.65 (B)
USA 4.25 (C) 4.88 (B) 4.15 (B)
Israel 4.7 (B) 4.73 (C) 4.01 (C)
Germany (W) 4.02 (C) 5.25 (B) 5.22 (A)
Germany (E) 4.52 (B) 5.54 (A) 5.16 (A)
Russia 5.63 (A) 5.52 (A) 2.88 (D)
Finland 4.07 (C) 4.89 (B) 5.02 (A)
China 5.8 (A) 5.04 (B) 4.94 (A)
Japan 4.63 (A) 5.11 (B) 4.07 (C)
*
Different letters mean statistically significant differences between the numbers.
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MAKE MANAGEMENT PRACTICE FIT NATIONAL CULTURES AND THE GLOBAL CULTURE 621
success, whereas women are supposed to be more modest, tender, and concerned with the
quality of life). Femininity pertains to societies in which social gender roles overlap (i.e.
both men and women are concerned with the quality of life; Hofstede, 1991 ). Kuwait and
South Korea are classified as the most masculine country. The most feminine cultures are
Hungary, Denmark and Sweden.
Future time orientation reflects the extent to which the culture focuses on long - term plan-
ning and outcomes, and on the delay of gratification. The most future oriented countries
are Singapore, Malaysia, Switzerland and the Netherlands.
Employees internalize the respective cultural values and use them to evaluate the
meaning of different managerial and motivational approaches as either opportunities or
threats. For example, differential reward systems would be positively viewed by employees
in individualistic cultures, and team - based incentives would be appreciated by employees in
collectivistic cultures.
People in different cultures internalize the prevalent cultural values of their society.
Therefore, they differ in the meaning they ascribe to a particular managerial approach. To
further understand what motivates employees in other cultures, and how they interpret the
meaning of various managerial practices, managers should first develop self - awareness
and understanding of their own motives and values (see Chapter 8 ).
The third subprinciple: Understand yourself and the cultural values you hold
The self is shaped by the choices one makes and by the shared understanding within a
particular culture of what it means to be human (Cushman, 1990 ; Markus and Kitayama,
1991 ). People develop self - knowledge through introspection (Chapter 8 ), direct experience
and evaluations provided by signifi cant others.
People strive to have positive self - perceptions and to experience self - worth and well - being.
They do their utmost to fulfill the motives of enhancement, efficacy, and consistency. Self -
enhancement is the experience of a positive cognitive and affective state of self - worth and
well - being; self - efficacy (Chapter 10 ) is the conviction that one is competent and effi cacious
in relation to specifi c tasks; self - consistency is the desire to sense and experience coherence
and continuity.
People monitor and evaluate the extent to which their behavior leads to the fulfi llment
of the three motives and the degree to which the work setting offers opportunities for such
behaviors (Bandura, 1986 ; Markus and Wurf, 1987 ).
The self and self - motives are shaped by one ’s choices and one ’s cultural values and
they set the standards and criteria for self - evaluation. These criteria vary across individuals
and cultures and, consequently, result in different self - conceptions. Individualistic cultures
support the independent self, who attends to personal criteria and standards for evaluating
the meaning of certain management practices as enhancing or inhibiting opportunities
for self - worth and well - being (Triandis, 1989 ; Markus and Kitayama, 1991 ). On the other
hand, collectivistic cultures support the interdependent self, who internalizes the criteria and
standards advocated by one ’s reference groups. One common measure of the independ-
ent and interdependent selves is the Twenty Statement Test, which asks a person to write
20 statements starting with the words “ I am . . . ” People with a strong independent self
use individual characteristics, such as: “ I am smart ” or “ I am tall, ” more frequently than
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622 M IRIAM E REZ
those who rank high on the interdependent self scale. The latter use attributes that refl ect
their relationships with others, such as: “ I am a father, ” “ I am a member of the ABC
organization, ” etc.
Managerial and motivational practices that satisfy self - motives of the independent self
would be different than those satisfying the interdependent self. For example, self - enhance-
ment driven by the independent self motivates individuals toward personal accomplishment.
The independent self evaluates positively managerial practices that provide opportunities for
individual success. People driven by the interdependent self, on the other hand, experience
enhancement when they contribute to the group ’s success because their self definition is in
terms of their relationship to others. This does not mean that independent people cannot
work in groups but it would be out of self - interest rather than duty. Similarly, self - effi cacy
is salient for people with a strong independent self, whereas collective efficacy, or the per-
ceptions of the group as competent, is important for the interdependent self. Finally, self -
consistency of the independent self is interpreted in reference to the individual ’s personal
history. Conversely, the interdependent self evaluates the level of collective consistency in
line with the collective history of the group to which one belongs.
The self constitutes the link between the macro level of culture and managerial practices,
and the micro level of employee behavior. Employees use their cultural values as criteria
for evaluating the potential contribution of various management practices to the fulfi llment
of their self - derived motives (Erez and Earley, 1993 ).
Managers who are aware of their own cultural values and motives are more amenable
to developing an understanding of other people ’s values and motives. Once they identify
the cultural characteristics of people from other cultures, they can more easily follow how
employees in foreign cultures would react to various managerial approaches.
However, employees working in the global work context belong not only to their local
national culture, but also to their global organizational culture. The social identity theory
(Tajfel, 1981 ) proposes that individuals develop a sense of belongingness to the group
that is meaningful to them. Extrapolating, we can say that individuals working in the glo-
bal work context develop a dual identity – a local identity, which reflects their sense of
belongingness to their local cultures, and a global identity, refl ecting their sense of belong-
ingness to their global work culture. People may hold multiple identities and they apply
the relevant identity to the context. When they communicate with others in the global
work context, their global identity and sense of belongingness to the global organization
become dominant, regardless of their location and national culture. On the other hand,
when they relate to others in their local organizational unit, their local identity becomes
dominant and they expect to be treated according to the norms of their local culture.
Thus, successful managers working in the global work context should be able to recognize
the dominant facet of the other person’s self identity, whether it is the global or the local
self - identity and relate to the dominant facet accordingly.
The fourth subprinciple: Implement employee - related management
practices that fit in with the cultural values
Managerial practices represent certain ideological or philosophical frameworks. For example,
individual - based differential reward systems and flat salary or team - based reward systems
c33.indd 623 6/17/09 3:28:54 PM
MAKE MANAGEMENT PRACTICE FIT NATIONAL CULTURES AND THE GLOBAL CULTURE 623
reflect different values. The former represents cultural values of individualism and the
importance of personal achievement, whereas flat salary or team - based rewards represent
cultural values of collectivism, where productivity is often measured on the team level and
compensation is based on team performance. Top - down communication systems represent
high power distance cultures, whereas a two - way communication system represents low
power distance cultures.
Formal rules and regulations and extensive written documentation represent high
uncertainty avoidance, whereas flexibility, risk taking, and low levels of formality represent
low uncertainty avoidance. Long - term investment in R & D represents future time orientation,
whereas short - term goals and balance sheets reported every quarter represent a short - term
orientation. Finally, the high percentage of women in socially oriented professions rather
than in engineering and sciences, and their low representation at the top managerial levels,
represent masculine rather than feminine cultures.
Very often, consultants and practitioners serve as agents of certain managerial techniques.
They advise management how to implement these techniques, following success achieved
in other places, while overlooking the cultural and ideological meaning of such tech-
niques. For example, the CEO of one steel company in Israel, who came to the company
after many years of military service, was known for his authoritarian leadership style. He
visited the steel industry in Japan and was very impressed with the participative man-
agement approach and the quality control circles he saw. Upon his return to Israel he
called in all his senior managers, told them about his visit, and instructed them that “ from
now on, you are going to implement participative management in the organization. ”
Obviously, his style of dictating to his subordinates was not a good model for participative
management.
The three principles – understanding the cultural values, knowing your motives and
values, and understanding the values refl ected by various managerial approaches – should
serve managers when selecting and implementing managerial practices. These principles
enable the fi t between people - oriented management practices and local cultural values.
MATCHING MANAGEMENT PRACTICES TO CULTURAL VARIATIONS
Management practices represent the way things are done in the organization: The way
managers delegate authority, allocate rewards, make decisions, and design jobs.
Figure 33.3 depicts the differences in management practices between collectivistic versus
individualistic cultures, in combination with high versus low power distance.
The following section elaborates on the implementation of goals and feedback, reward
allocation, participation in decision making and empowerment, and quality improvement
systems in different cultures.
Goals and feedback
One major responsibility of managers is to set goals and motivate their employees to
achieving them. There are different ways to set goals – either by assigning them or by
involving employees in making the decision about them – and different ways to realize
them. In some cases, employees can be empowered to set their own work goals. Employees
c33.indd 624 6/17/09 3:28:54 PM
Low
624 M IRIAM E REZ
High
Power Distance
Top-Down – Group Top-Down – Individual
Assigned Group Goals Assigned Individuals Goals –
Group Feedback Individual Feedback
Face Saving – error Be successful – promotion
prevention
Team based bonus – high Individual based bonus – high
differential differential
Lateral – Group Lateral – Individual
Participative Group Goal setting Empowering personal goal setting
Team reflexivity – Feedback 360-degree personal feedback
Face Saving/harmony – Error Risk taking/uniqueness –
prevention promotion towards new
opportunities and new records
Team based bonus – low Individual based bonus – low
differential differential
Collectivism Individualism
FIGURE 33.3 Fit interpersonal management practices with local cultures
in Western cultures are more intrinsically motivated when they are involved in setting the
goals rather than when goals are externally set for them. Empowerment is considered to
be a strong motivational approach in Western cultures. This is not the case in India and
the Far East. In these high power distance cultures, employees expect their boss to set
goals for them and they are highly motivated to accomplish externally set goals. In fact,
managers who empower their employees to set goals are considered to be weak and they
often lose the respect of their subordinates.
Employees in Asian countries, where there is high collectivism and high power distance,
are often more strongly motivated to avoid errors and failures than they are motivated to
win and be the first one. This may be because of the fear of authority should they fail,
and because of fear of failing the group to which a person belongs, as his/her personal
failure is attributed to the entire group. Therefore, employees in the Far East are likely to
set moderate rather than diffi cult goals, to reduce the risk of failure.
The motivations to avoid failure and to save face have implications for what is deemed the
acceptable form of feedback. Feedback is considered to be a strong motivational factor in
Western cultures, in particular when it is provided at the individual level. Yet, in countries
such as Japan, feedback takes a different form. Explicit individual feedback threatens the
individual ’s status in the team. It violates the important value of face saving, causing a
person to feel shame. For this reason, implicit and impersonal feedback, oriented to the
collective rather than to the individual, is considered to be the norm. Consequently,
Western managers operating in the Far East should recognize such cultural differences
and adjust their feedback to their employees to the local culture.
Reward allocation
A key issue is how to allocate rewards in order to enhance motivation. If you are an
American manager, you most likely implement the principle of equity. Indeed, in most
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MAKE MANAGEMENT PRACTICE FIT NATIONAL CULTURES AND THE GLOBAL CULTURE 625
individualistic cultures, the rule of individual merit serves as the criterion for reward
allocation. Employees receive rewards based on their individual contribution to goal
attainment. Implementing rewards for performance requires the setting of criteria and
standards for performance and an appraisal system for evaluating employees according to
these criteria.
Payment - by- results dominates individualistic cultures such as the USA, England,
and Australia. In collectivistic cultures payment - by- results may violate group harmony.
Furthermore, it threatens the organizational hierarchy, as the most effective employee
may not necessarily be the most senior and respected one. In that case, seniority plays an
important role in the reward structure. Furthermore, when the work design is for teams,
as is often the case, the reward differential is team based.
Managers in different cultures value different work components when evaluating their
employees. Western managers evaluate employees mostly on the basis of performance
effectiveness. Yet, Chinese managers put less emphasis on work performance as a criterion
for rewards, compared with American managers. Rather, they consider the quality of
interpersonal relationships to be more important for work than Americans (Zhou and
Martocchio, 2001 ).
Rewarding for performance is less acceptable in collectivistic cultures and mainly
when it is public. Chinese managers use the rule of equality more often than Americans
mainly with respect to in - group members. However, for out - group allocation, equality is
used when the allocation is public, to maintain face saving, while in - group favoritism often
takes place when allocation is done privately. Similarly, Koreans, as opposed to Americans,
perceive allocators who use equality rather than the merit rule more favorably. Swedish
people use equality more frequently than Americans. The Swedish educational system
discourages competition in favor of cooperation and teamwork.
In addition, the Swedish view the idea of need more positively than do Americans. The
need rule is most highly preferred in India and in other collectivistic cultures, particularly
when needs become visible (Murphy - Berman, Berman, Singh, Pachauri, and Kumar, 1984 ).
The above findings lead to the conclusion that the application of an inappropriate
distribution rule may engender feelings of injustice, mitigating employees ’ motivation.
Therefore, knowledge about cross - cultural differences with regard to preferences of allocation
rules is vital for managers who operate outside their home country.
Teamwork and multicultural, virtual teams
Teams have different meanings in individualistic versus collectivistic cultures. Metaphors
of teams in Puerto Rico and the Philippines, two collectivistic countries, are often in rela-
tional terms such as family and community. On the other hand, Americans use meta-
phors involving sport teams, refl ecting an instrumental approach to teams as the means of
accomplishing certain outcomes (Gibson and Zellmer- Bruhn, 2001 ).
Team work and tasks of high interdependence among team members prevail in col-
lectivistic cultures. Yet, individualists prefer to be personally responsible for their job and
to get personal recognition for their performance outcomes. Individualists are intrinsically
motivated when empowered by their managers and when given the autonomy to craft
their jobs to fit their personal resources. In contrast, collectivists are empowered when par-
ticipating in the team decision - making process and when their team voice is being heard.
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626 M IRIAM E REZ
Work autonomy, whether at the individual or the team level, is not acceptable in high
power distance cultures. Yet, in low power distance cultures, such as that of Israel,
employees react negatively to goals that are assigned to them, as compared to employees
who were allowed to participate in goal setting (Erez and Earley, 1987 ). Social loafi ng as
observed by group performance loss is more prevalent among individualists who do not
share responsibility and prefer to take a free ride, mainly when their individual contri-
bution to the team cannot be identified. In contrast, social loafing was not observed in
group - oriented cultures, such as China and Israel, providing the team members had a
specific goal to acheive (Earley, 1989 ; Erez and Somech, 1996 ). In individualistic cultures,
social loafing disappears when team members ’ contribution can be identified and when
they are held personally accountable and responsible for the group outcomes (Weldon and
Gargano, 1988 ).
Recent developments in communication technology have supported a relatively new
form of virtual - multicultural teams (see Chapters 15 and 32 ). Such teams collaborate on
joint projects while their members are located in different geographical zones and cultural
environments.
Managing multicultural, virtual teams requires first and foremost the creation of a
shared understanding among the team members. This is done by cultivating the global work
values to be shared by all team members, and by creating a team identity that strengthens
the sense of belongingness to and identifi cation with the team.
CASE EXAMPLES
Personal dilemma in an international acquisition
David A. is the CEO of Diamob, a young Israeli start - up in the medical instrument indus-
try that develops high - resolution ultrasound diagnostics equipment on mobile computers.
Diamob has just been acquired by a large US - based multinational company – Medica. Right
after the acquisition there were rumors that Medica was going to transfer the new technology
to other existing departments, closing Diamob Israel. The small group of 40 engineers and
scientists was in a state of high ambiguity and each one of them had to decide what to do
next. There were two options: to leave the company and search for another job, or to stay as
a group and negotiate with Medica to let Diamob grow to a self - sustained profi t unit.
David A. – Diamob CEO – knew that he could easily get a job in another company.
Yet, if he quit, it would probably lead to the end of Diamob. David was a personal friend
of most of the other engineers in Diamob. Many of them served together in the Israeli
Defence Force and have remained friends since then. David was proud to see that in the
first month after the acquisition the group stayed together and no one left in search of a
new job even though their job security was at risk.
David gathered together the unit managers to discuss their future strategy. After long
hours of discussions they developed a business plan that justified their continuous growth
as a sustainable profit unit. David had to meet with Jeff S. – CEO Medica – and present
to him the new Diamob business plan.
The meeting took place in an airport hotel on the East Coast. David ’s voice repre-
sented the voice of all his 40 engineers and he was very determined to succeed in getting
Jeff to support the new business plan. Jeff listened to David and said: “ listen, David, you
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MAKE MANAGEMENT PRACTICE FIT NATIONAL CULTURES AND THE GLOBAL CULTURE 627
are a very small group. We acquired Diamob because of your technology innovation
and your initiative to develop the new product. We plan to recruit a small number of key
experts from Diamob to Medica by offering them a high salary and then close Diamob,
letting all other members go. You are the first one we want to hire. Your salary will be
equal to the top executives in Medica, with a nice package of bonuses and stock options. You
and the few people we hire will have to move to the US. Israel has a very small market and
there is no reason for us to keep the site there.
David reflected upon what he just heard. From a personal point of view he had an
opportunity to grow, to open up his horizon and scope and to get promoted in a large
MNC. His salary and compensation package was going to be much higher than the
present one. He would be able to support his family easily without any fi nancial worries.
On the other hand, it would mean that he would be separated from his colleagues, they
would be losing their jobs and their dream to develop the small start - up company into a
large profi t organization would not materialize.
What is David ’s reply going to be? To answer this question, please take into consideration
the cultural values of Israel, as summarized in Table 33.1 .
What do you think David ’s reply would be if he were an American, working in the US
and getting an offer from a European MNC?
Take into consideration the tension between global integration and local responsiveness
and elaborate on how this tension is going to infl uence David ’ s decision.
Cultural differences between employees and their manager
Red Algae is a Japanese company located in Eilat, a tourist town on the Red Sea, the
south point of Israel. The location, the water and the temperature are most suitable for
growing Red Algae, which is considered to be a very healthy food supplement consisting
of high percentages of beta - carotene.
The company grows the Red Algae in Eilat, produces it as a food supplement pill in
Japan, and sells it in the global market. The patent for Red Algae was written by life sci-
ence researchers at the Weizmann Science Institute in Israel. The climate and type of
soil in Eilat are considered by scientists to be most suitable for this purpose. The founder
of the company and the top management team are all Japanese, but the chief scientist
and the employees are all Israelis. The profit gain on the raw material grown in Israel is
not that high. Most of the profit is being made on the food supplement pills. The Israeli
inventor who has the technological patent is interested in making a joint venture with the
Japanese company and to produce the pill in Israel. However, the Japanese headquarters
strongly objects to it. In their view, Israeli employees do not strictly follow the rules, they
like to improvise and they do not pay enough attention to detail. They are good in idea
generation and innovation, but not in the careful, error- free implementation.
Mr. Takashi was appointed the Israel site manager. He oversees the process of growing
the Red Algae in a special outdoor farm. The process is highly automatic and for this
reason, the number of employees is relatively small, about 35, including Dan, the chief
scientist. Mr. Takashi learned the production process with the help of Dan. He carefully read
all the existing literature on growing Red Algae, including the patent of the Weizmann
Institute. He, then, developed a set of procedures that should be carefully followed by the
employees, to assure the high quality of the Red Algae.
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628 M IRIAM E REZ
Mr. Takashi wanted to implement Japanese management procedures. He expected all
employees to appear on time, early in the day, to get together for the morning meeting to
get updated about special problems and to align expectations. However, he has diffi culties
controlling the Israeli employees. First, they do not arrive at the same time in the morn-
ing. For this reason, he cannot properly hold the morning meeting. Second, they hardly
follow the rules that he set for them. Some of them take a break during working hours
to complete some family duties they have outside the workplace. Then, they stay late on
their own, to compensate for the time taken, rather than working in close coordination
with all other employees. Furthermore, employees are careless with respect to document-
ing their activities, as he requested. He often worries that the lack of standardization and
documentation will result in a big disaster – the Red Algae will not grow to the quality
and size needed. It often gets to critical points when he does not know how to cope with
unexpected situations. These are exactly the moments when the Israeli employees become
very alert, full of energy and resourcefulness, and they manage to improvise, rather than
going by the book to resolve the problem.
Mr. Takashi keeps saying to his Israeli employees: “ Please, do what you are required to
do, please follow the rules very accurately. If you do this you will not have to improvise.
I gave you specific guidelines. Simply follow them. Why argue with me all the time that
there is a better way to do things. If I give you instructions, you need to follow them with-
out any arguments. ”
Mr. Takashi feels that he does not properly manage the site and does not want to fail.
Therefore, he asks his board to send him back to Japan. The Red Algae site in Israel now
operates without the CEO.
Answer the following questions:
1. Should the company replace the Japanese manager with a local manager?
2. What are the main differences between Japanese and Israeli cultures?
3. Do you see these cultural differences as an advantage or a disadvantage to the
company?
4. How can managers turn a potential disadvantage of cultural diversity into an
advantage?
5. Think of culturally diverse teams. How can you bring people from diverse cultural
backgrounds to work, communicate, and collaborate with each other effectively?
CONCLUSION
Global managers in the third millennium operate across cultural borders and
geographical zones. They need to cope with the complexity of the global work
environment, which consists of both the macro level of the global culture and the
level of diverse national cultures nested underneath it. The core principle is, there-
fore, one of maintaining a global integration of one unified organization, but in
parallel, understanding the cultural values and norms of the diverse workforce and
relating to employees in each cultural setting according to their codes of behavior.
Global integration should take place with respect to the task - oriented managerial
roles and values. These values should be homogeneously adopted across all subsidiaries
c33.indd 629 6/17/09 3:28:55 PM
MAKE MANAGEMENT PRACTICE FIT NATIONAL CULTURES AND THE GLOBAL CULTURE 629
and business units to allow communication and coordination of all organizational
activities towards organizational goal accomplishment.
Nonetheless, local responsiveness should be implemented, mainly with respect to
interpersonal relationships. Sensitivity to others begins with self - knowledge. Managers
who learn about their own motives and cultural values recognize how such values
shape the motives for coming to work, the desire to achieve goals, identifi cation with
the organization, and adaptation to the changing requirements. Managers who are
aware of the meaning of their own self - worth and well - being can be sensitive to
others ’ values and they are aware of the meaning of respecting these values for a
person’s sense of self - worth and well - being. Recognizing the diverse cultural environ-
ment should guide managers in selecting and implementing management practices
that best fit the cultural values of employees in the business units they manage. While
there are potentially many different practices that managers can implement, cultural
values, once acknowledged, should serve as criteria for selecting and implementing
the most effective management practices.
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MAKE MANAGEMENT PRACTICE FIT NATIONAL CULTURES AND THE GLOBAL CULTURE 631
EXERCISES
*
The MCT project – bonus allocation
You are the global HR manager in a big multinational company that provides programming
services. The company received a big project from a new global Chinese customer. The
estimated time for accomplishing the project was one year.
A multicultural team (MCT) from a few subsidiaries was nominated to complete
the mission. The virtual MCT consisted of five employees who worked on this project,
which was estimated to bring revenues of about $ 2,000,000. However, the customer
needed to have the project completed within nine months due to some changes in
the market.
You talked with the team and promised them a bonus if they meet the new deadline.
The team members stayed long hours and put in a lot of effort. As a result of the extra
time and effort, the team was able to make it on time.
You have $ 100,000 to allocate as a bonus to the five group members. You have the
following information about the five employees:
Person A: American nationality. He was the team leader. Put in a lot of effort and extra
time to accomplish the project. He is very young (26 years old), single, individualist, and
a promising manager.
Person B: German nationality. Did his best to get the project done within nine months
and stayed extra hours at work, despite the fact that he is a single parent with two
young children.
Person C: Mexican nationality. She is an excellent team member, very helpful to the other
members. She badly needs more money to cover extra medical expenses for her parents.
Person D: Chinese nationality. He is a very infl uential person in his community. His
social network helped the company to get this project. He spends a great deal of time
socializing with employees of the customer Chinese company during the project.
Person E: Indian nationality. She is a specialist. She has the specialized knowledge
necessary to do the work. Her contribution was crucial to the project and accounted
for about 30% of the total time saving.
Distribute the $ 100,000 among the five team members. Indicate the percentage allocated
to each member, the amount of money allocated to each member, and why. Specify the
reasons for your decision.
*
I would like to thank my doctoral student Alon Lisak for his contribution to preparing
the exercises.
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632 M IRIAM E REZ
Person % Amount Why
A
B
C
D
E
T O T A L
Getting to know the host culture
Practice target
Develop an awareness of cultural differences and identify the underlying cultural values
of observed behaviors.
Instructions
1. Four volunteers leave the classroom for a few minutes.
2. The remaining students receive the following instructions: When your friends return
to class, you will act as employees from a foreign country. When you answer their
questions, you must follow these rules:
(a) You refer to “ We” and not to “ I. ” You do not respond to very personal questions
concerning your personal opinion, feelings, etc. You look at your classmates, try-
ing to get their agreement to what you say. (Individualism – Collectivism)
(b) You answer only when they use your family name, or another gesture of respect
(e.g. Mr., Dr.). You also respond with gestures of respect. (Power distance)
(c) When a woman is being asked, the man sitting next to her will reply instead.
(Masculinity – femininity)
(d) Your answer should not be factual or evidence based. Rather, you should
respond in vague and ambiguous terms. (For example, “ it will be all right “ ; “ people
say . . . , ” “ we ’ ll give it a try . . . , ” etc.). (Uncertainty avoidance)
(e) You avoid confl icts and disagreements. (Harmony)
3. Please call back the volunteers and say: “ Your multinational organization sent you
as expatriates to work on a project which runs in a foreign country. This is your fi rst
day in the new site. You want to establish relationships with the local employees.
Employees in your host country have different cultural values and rules than the ones
you have. Your objective is to discover these rules. You can ask your foreign employ-
ees any question you like. ”
4. Let the class play the game for 15 minutes.
5. Discussion: At the end of the exercise you ask your class to interpret the rules in terms
of Hofstede ’s cultural dimensions (1991, 2001). Identify differences between the host
country and the expatriates. Ask the class to reflect upon the process of discovering
the rules of behaviors and their underlying values. In addition, ask the participants
to say how they felt about each other, what frustrated them, whether they were able to
relate to each other and whether they believe they could successfully work together.
bindex.indd 633 6/17/09 8:14:18 PM
Index
360 degree feedback systems 88–9
1001 Ways to Reward Employees (Nelson)
246, 248
Abilene Paradox 313–14
ability 8–11, 389–404
see also knowledge, skills, abilities and other
characteristics
absenteeism 22–3, 25, 194
accidents 24
accounting case example 605–7
acquisitions 138
action tendency 148–9
actorhood 617
Adams, J. S. 255–6
AEC (architecture, engineering and
construction) 603
affect, positive 484
affective integration 332, 338
affective states, training 62, 70
aging workforce case example 508
agreeableness 29–30, 48
Alavi, Maryam 595–614
Allison, John 378–80
Amabile, Teresa M. 481–97
Amazon.com 604
ambidexterous organizational structure 416
American Federation of Government
Employees 230
America Online 130
Ancona, Deborah 295–307
Andersen Consulting 600, 607
Angel Johnson Organics 570
anonymous feedback 89
anticipatory coping 504–5, 509
Appache software 604
appeals 358–9, 361
Apple Computer 537–45, 549
see also Jobs, Steve
appraisals of performance 85–104, 259, 283
apprising tactic, influence 357, 361
architecture, engineering and construction
(AEC) 603
area-product matrix structures 418
ASDA case example 550–1
Ash, Mary Kay 565
Asian work culture 624
ASQ (Attributional Style Questionnaire) 511
attitudes
see also knowledge, skills and attitudes
job attitudes 124–9, 136
vision statements 369, 372, 374–5
Attributional Style Questionnaire
(ASQ) 511
attribution theory 397
authoritarian leadership 510
authority 350–1, 355
automobile design case example 337–9
autonomy 483
aviation case examples 77–8, 288
avoiders 522
“babbler” case example 438
backcasting 315
Baltes, Boris B. 581–94
Bandura, A. 166–7, 179–200
bank teller case example 250–1
Barnard, Chester 276
Barrick, Murray R. 19–39
BARS (Behaviorally Anchored Rating Scale)
90, 92
Bartol, Kathryn M. 217–38
bindex.indd 634 6/17/09 8:14:19 PM
634 INDEX
BATNA (best alternative to negotiated
agreement) 520, 528
Baum, J. Robert 559–78
BB&T bank 378–80
Bechky, Beth A. 309–25
Becton Dickinson 547
Beer, Michael 537–55
behavioral change 249
Behaviorally Anchored Rating Scale (BARS)
90, 92
behaviorally-based performance appraisals
89–91
Behavioral Observation Scale (BOS) 90–2
behavior prediction 20–5, 33–4
belief in personal effi cacy see self-effi cacy
benchmarking 166–7, 544–5
benevolence 389–404, 437
best alternative to negotiated agreement
(BATNA) 520, 528
Best Buy 91
best practice benchmarking 544–5
Bies, R. J. 257–8
Big Five see Five Factor Model
BIM (Building Information Management) 603
blended learning 65, 75–6
Blink (Gladwell) 473, 475
Blockbuster fi lm 320–1
Bond, S. D. 464
bonuses 218, 221
see also rewards
Booz, Allen and Hamilton 138
BOS (Behavioral Observation Scale) 90–2
“bottom up” processes 466–7
boundary activities of teams 295–307
see also teams
backgrounds of members 296–7
balancing demands 302
case examples 302–4
changing tasks 301–2
composition of team 299–300
confi guration of team 298–300
critical processes diagram 301
environment mapping 299–300
external ties 297–300
functional diversity 297, 299–300
limitations 300–2
mechanisms used 296–9
moderators 300–2
nature of task 300–1
research 295–6
brainstorming 430, 471–2, 570
Branson, Richard 208
Brett, J. M. 518
bricolage 318–19, 563
Brin, Sergy 559–61
broadband networks 596
Brooks, Frederick 279
Brown, Gwendolyn 608
Buffet, Warren 157
Building Information Management (BIM) 603
burnout 156–7, 502
Cai, Deborah A. 425–44
Caldwell, David 295–307
Canadian supervisor study 264
careers 32–3, 138, 181, 507
Carson, Johnny 526–9
Carter, Bill 526
challenge 483, 501
Challenger space shuttle case example 475–6
change behaviors 563–4
see also organizational change
checklist decision-making systems 470–1
chemical company case example 400–1
Chen, S. S. 436
childcare on worksites 585–6
Children’s Hospital, Boston 228–9
China 373, 429, 625
Cisco Systems 230–1
Citigroup 138
citizenship behaviors 21–2
Clark, Malissa A. 581–94
coaching
performance appraisals 95–6
self-effi cacy 167
supporting change 547–8
teams 281, 284–6
coacting groups 279
coalition tactics 360–2
Coch, L. 446
cockpit crew case example 288
coercive power 352–3
cognitive factors in decision making 42–5
cognitive modeling, skills 191–3
cognitive states, training 62, 70
cognitive theory, social 240–2
cognitive-transactional stress theory 500–1
collaboration 327–46
case examples 337–9
conflict management 327–46
bindex.indd 635 6/17/09 8:14:19 PM
INDEX 635
cultivating helpful conditions 330–7
escalation of confl ict 336–7
identifying strategies 329–30
infl uence 359
negotiation 519–21
packaging issues 336
propensity toward 333–5
relationship confl ict 327–30
task confl ict 327–30
teams 327–46
confl ict types 328–9
member behavior 335–7
orientation 331–3
trade-offs 336, 339
collective effi cacy 331–2, 622
collective intuition 309–25
building intuition 310–12
expertise 310–11
information 310–12
variety 310–11
well-rehearsed roles 312
collectivistic cultures 373, 619, 625
see also Japanese work culture
Colquitt, Jason A. 389–404
commitment
conscientiousness 28
emotional stability 28
goal setting 163–8
job satisfaction 28
power 356
procedural justice 259
trust 392
turnover 125
communication 425–44
Apple Computer 538
balance 425–44
case examples 438–40
emails 431–2
formal/informal learning 434–5
information exchange 335–6
IT 596–7, 599–601
listening 427–8
manner 428–9
newcomers/veterans 435–6
non-responses 432
organizational change 547
pay for performance 222
performance appraisals 93–4
relational activities 432–4
senders/receivers 425–7
speaking/listening 427–8
task/relational activities 432–4
teams 296, 332–3, 335–6, 433–4
timing 429–32
trust 391, 393, 396, 436–7
veteran employees 435–6
vision statements 367–8, 373–4
comparative performance appraisal 89–90
compensation, SOC 587–9
competence
see also knowledge, skills and attitudes;
KSAOCs
Apple Computer 538
coping with stress 503
pay for performance 222
teams 300
trust 393–4, 437
competencies, self-regulatory 193–4
competition 486, 616
compliance 24, 351–3, 356
compressed workweeks 584
confl ict 517–35
see also task confl ict
breaking escalation 336–7
case examples 526–9
collaboration management 327–46
costs of disputing 518
decision-making 472–3
manager’s role 517–35
mediation 521–6
negotiation 519–30
packaging issues 336
relationship confl ict 327–30
resolution 518–19, 525
work-family balance 581–3
Conger, Jay A. 201–16
conscientiousness 19–39
career success 32–3
case examples 32–4
meta-analytic studies 20
performance predictors 20–1, 26–9, 33
predicting behaviors 20–5, 33–4
selecting employees 19–39
trust 437
consensus with qualifi cation 318–19
consultation 358, 361–2
contextual factors in decision making 42–5,
48–9
contextual interventions, mediation 524–5
contextual performance (CP) 6, 21
bindex.indd 636 6/17/09 8:14:20 PM
636 INDEX
continuance commitment 28
control of emotions 145–59
cooperation 333–5, 616
coping strategies 499–515
see also stress
Corporate Ink Public Relations 132
corporate “parenting” 417
cost-benefit analysis 462
cost control 415–17
costs of disputing 518
counterproductive work behaviors (CWBs) 5–6,
21–2, 86–7
Countrywide Financial 228, 376
Covey, S. R. 510
Cowden Associates 131
CP (contextual performance) 6, 21
Creative Problem Solving (CPS) 487
creativity 481–97
Apple Computer 538
case examples 487–91
determining factors 484–5
entrepreneurship 560, 564–5, 570
extrinsic motivation 481–2, 485–6
implementation 486–7
intelligence 482
intrinsic motivation 481–2, 484–6
positive affect 484
tools 487
trust 391
work environment 483–7
credit card processing case example 251
Crew Resource Management (CRM) 78
cross-functional product development case
example 337–9
cross-functional teams 471
CSRs (customer service representatives)
11–13, 156
culture
global 615–32
management practice 615–32
national 615–32
organizational change 540–1
pay for performance 225
trustworthiness 392–4
vision statements 373
work-family strategies 586–7
customers
Apple Computer 538
conscientiousness 22
emotional stability 22
needs 538
service 11–13, 22, 156
staff performance feedback 88–9
customer service representatives (CSRs)
111–13, 156
CWBs (counterproductive work behaviors) 5–6,
21–2, 86–7
Dalgaard, Lars 134
Daniel, John 591
dashboard interface 72
deadlines 317–19
decentralization 411–12, 414–15
decision making 461–80
accurate predictions 468–9
analysis paralysis 472
broadening techniques 465–75
formal 465–9
informal 469–72
limitations 472–5
case examples 475–7
checklist systems 470–1
“consider an alternative”
technique 470
diverse perspectives 471–2
Five Whys 470
future world states 467–8
group process 317–18
hiring example 466–8
integrity of leaders 395–6
interviews 42–9
IT 599–601
multiple attributes 466–7
narrow frames 462–5
alternatives 464
future view 463
objectives 463–4
social environment 464–5
pet ownership study 468–9
pitfalls 462–5
politics and confl ict 472–3
quantitative techniques 469
quick decisions 473–5
research 42–3
Ringi decision making 452
searching for information 470
self-effi cacy 181
teams 299
trade-offs 473
trust 395–7
bindex.indd 637 6/17/09 8:14:20 PM
INDEX 637
decision support system (DSS) 599–601
dedication to job 21
defensiveness 157
Dell Computer 602, 606
Dell, Michael 559, 561
dependability 437
“devil’s advocacy” role 315
diagnostic interventions 524
digital components, embedded 605
discrimination laws 24
disempowerment 202–4
see also empowerment
dissatisfaction 542–3
distributed teams 279–80
distributive justice 255–6, 259
distributive negotiation 519, 525–6
diversifi cation 410, 413–18, 420
diversity, creativity 483, 487
divisionalization 414–16, 420
Donaldson, Lex 407–24
Donohue, W. A. 428
Dresser, Mickey 155
DSS (decision support system) 599–601
due diligence 60–1, 69
Duncan Hines angel food cake factory 112–13
Dunlap, Al 552
Durham, Cathy C. 217–38
dynamism, industry 560, 567–8
dysfunctional habits 190–1
earnings see wages
eBay.com 604
Eberly, Marion B. 123–42
EDI (electronic data interchange) 602
educational systems 283
effectiveness
communication 426
confl ict resolution 518–19
decision making 461–80
infl uence 361–2
leadership power 355–6
manager stress 499
mediation 521
participation 450–1
self-effi cacy 179–200
teams 275–93
vision statements 371–3
effi cacy
see also self-effi cacy
collective 331–2, 622
effort 27
EI (emotional intelligence) 154
Eisenhardt, K. M. 311, 316, 568
Eisenstat, R. 546
eldercare 582
electronic data interchange (EDI) 602
Electronic Products 547–8
electronic technology
cognitive modeling 192–3
data interchange 602
meeting support systems 451
performance appraisals 87, 89
self-effi cacy 182
emails 431–2
see also communication; information
technology; Internet
embeddedness into job 130–1, 136
emotional intelligence (EI) 154
emotional stability 19–39
career success 32–3
case examples 32–4
meta-analytic studies 20
performance predictors 20–1, 26–9, 33
predicting behaviors 20–5, 33–4
selecting employees 19–39
emotions 145–59
achieving control 152–3
action tendency 148–9
affective integration 332, 338
burnout 156–7
case examples 153–4
changing emotions 150, 153
communication 431–2
control 145–59
CSRs 156
defense 152, 157
defi nitions 145–51
emoticons 431
empowerment 205–6
experience vs expression 155
faking emotions 155–6
injustice 260
intelligence 154
introspection 149–52, 154
leadership roles 157–8
life happiness 158
mediators 151
moderators 151–2
moods 146–8, 155–6
multiple emotions 148
bindex.indd 638 6/17/09 8:14:20 PM
638 INDEX
emotions (Continued)
nature of 145–6
offi ce mood 155–6
reason 149–51, 157–8
relationship confl ict 328–9
role of emotions 151
self-effi cacy 185
stability 19–39
team conflict 328–9, 332, 336–7
at work 150, 155–6
empathy boxes 164–5
employees
see also selection of employees
employee-related management 618, 622–3
GMA-based systems 10
hiring 8–11, 45–56, 466–8
employment 12–13
see also job performance; work . . .
empowerment 201–16
see also power
case examples 208–11
contextual factors 202–4
coping with stress 507
hierarchical leader behavior 202–3
individual difference 207
job design 202–4
leadership 202–3, 205
limitations 206–7
management practices 202, 204
organizational factors 202–3
personal interpretation 202, 206
reward systems 202–3
self-confi dence 207
self-effi cacy 202, 204–6
stages 202–6
enactive mastery experiences 184–5
encouragement 483
e-negotiations 521
Enterprise Resource Planning (ERP) 400,
598–9, 606–8
entrepreneurship 559–78
case examples 572–5
change behaviors 563–4
conscientiousness 23
context 562
creativity 560, 564–5, 570
defi nitions 561–2
emotional stability 23
experimentation 559–78
goal-setting 560, 567, 571–2
implementation 569–72
importance 561
industry dynamism 560, 567–8
moderating factors 567–9
munifi cence 560, 568–9
overview diagram 560
principles 559–61
regional munifi cence 560, 568–9
resources 560, 569
self-effi cacy 182, 560, 566, 571
start-ups 562
swiftness 559–78
tenacity 560, 565–6, 570
environmental uncertainty 169–70
environment mapping 299–300
epistemic motivation 334–5, 339
equality 620, 624–5
equity theory 255–6
Erez, M. 172, 615–32
ERP (Enterprise Resource Planning) 400,
598–9, 606–8
error management 170
Eversheds law fi rm 376
Exactech 132
exchange tactics, infl uence 358–9, 361
expatriates 23
expectancy theory 26
experiences 63–4, 72–3, 155
experimentation 559–78
expertise
creativity 485
decision making 473–4
group process 310–11
power 353–6
expression, emotional 155
extraversion 29, 48
extrinsic motivation 481–2, 485–6
face-to-face teams 279
fairness 393
see also organizational justice
faking personality traits 32
family interfering with work (FIW) 582–3
see also work-family balance
Federal Express (FedEx) 565, 608–10
feedback
behaviorally-based rating 91
global culture 623–4
goal setting 163
informal recognition 245
bindex.indd 639 6/17/09 8:14:20 PM
INDEX 639
organizational change 544
perfecting skills 188
performance appraisals 88–9, 91
training 76
feminine cultures 620–1
FFM (Five Factor Model) 20, 29
Fielbig, Ashley 517–35
Fink, Edward L. 425–44
Finnish hospital worker study 261
First Tennessee Bank 590–1
Fisher, Colin M. 481–97
Fisher, R. 519
Five Factor Model (FFM) 20, 29
see also personality traits
Five Whys 470
FIW (family interfering with work) 582–3
fl exibility
fl extime 583–4, 591–2
interviews 41, 52
work schedules 507
Folger, R. 257
follower trust 397
follower vision 369, 372, 374–5
Ford, Henry 566
forecasting 315
forethought 242
formalization of organization 410–11
Four R listening method 428
frame of reference training 74, 92
Franklin, Benjamin 462
FRCH Design Worldwide 131–2
French, J. R. P., Jr 446
Frese, M. 170
Friedman, I. A. 508
Friedman, L. T. 615
functional-product matrix structure 416–17
The Functions of the Executive (Barnard) 276
fundraising case examples 362–3
future time orientation 621
gainsharing 219
Gates, Bill 559, 561, 565
General Electric (GE) 208–9, 469, 552
general mental ability (GMA) 4–14
General Motors 566, 604
geographical diversity 410, 417–18
geography-product matrix structures 418
Ginnett, Robert 288
Gist, M. E. 188, 192
Gladwell, Malcolm 473, 475
global culture 615–32
case examples 626–8
employee-related management 618, 622–3
identifying national characteristics 618–21
interpersonal practices 618, 624–5
local/global contexts 616–17
management practice 615–32
multi-level model 616
practice/culture matching 623–6
principles 618–23
shared work culture 617–23
task-oriented practices 618
teamwork 625–6
understand own values 618, 621–2
global pay 230–1
see also pay for performance
Global Positioning systems (GPS) 605
Globe Study (House et al.) 620
GMA (general mental ability) 4–14
GNS (Growth Need Strength) 114–15
goals
see also goal setting
commitment to 163, 165–7
self-efficacy 163, 165–7, 180, 193–4
teams 331
goal setting 161–78
case examples 172–3
challenging goals 162–3
commitment 163–8
coping with stress 505–7
distal/proximal goals 169–70
entrepreneurship 560, 567, 571–2
environmental uncertainty 169–70
feedback 163
framing goals 171
future direction 174
global culture 623–4
high performance cycle 170–1
implementation 171–2
interviews 46
learning 168–9, 171
motivation 26
outcome expectancies 163–5
performance 93, 161–78
resources 168
self-regulation 172
setters of goals 172
specific goals 162–3
stretch goals 170
vision statements 371–2
bindex.indd 640 6/17/09 8:14:21 PM
640 INDEX
Goldberg, S. J. 518
Golden Banana award, Hewlett Packard 247
Gooding, R. Z. 446–7
Google 559–60
gossip 435
Gottman, John 475
GPS (Global Positioning systems) 605
Granovetter, M. S. 436
Graphic Rating Scale 90
Greeley Hard Copy 416
Greenberg, Jerald 255–71
group process 309–25, 600–1
see also teams
case examples 320–1
collective intuition 309–25
creativity 485
leadership 319–20
milestones 317–19
pacing the process 309–25
task confl ict 309–25
group support system (GSS) 600–1
Groupthink 314
Grove, Andrew 543
Growth Need Strength (GNS) 114–15
GSS (group support system) 600–1
guided skills mastery 186–93
cognitive modeling 191–3
enabling modeling 187
modeling 187, 191–3
perfecting skills 187–9
self-effi cacy 186–93
transfer training 189–91
verbalizing thoughts 191
Hackman, J. R. 109, 275–93
Haire, Mason 163
Handelsbanken 229–30
hardiness 510–11
health issues
see also physical state; stress
conscientiousness 24–5
emotional stability 24–5
injustice 260–1
insomnia 264–5
self-effi cacy 183
Hewlett-Packard 229, 247, 549–50, 601
hierarchy 408–9, 411, 433
see also Japanese work culture
high performance cycle 170–1
hiring employees 8–11, 41–56, 466–8
Hogan Personality Inventory (HPI) 31
Holtom, Brooks C. 123–42
Home Depot recognition program 246
Honest Tea 570
honesty 396
horizontal loading, job satisfaction 112
hospital case example 250
hospital workers, Finland 261
hotel turnover case example 126
House, Robert 620
HPI (Hogan Personality Inventory) 31
HR (human resource) departments 433
human learning theory 5
human resource (HR) departments 433
humor 319–20, 434
Humphrey, S. E. 109–10
IBM 569, 601, 604, 607
ideas generation 482, 484, 487
see also innovation
identifi cation, personal 354
identity 622
Ilies, R. 26
impression management 31–2
improvisation 563
incentive plans 217–18
see also recognition
independent interviewers 44, 49
independent self 621–2
Indian work culture 624
indirect management 517
individualism 619
industry dynamism 560, 567–8
industry experience 560, 571–2
infl uence 349–65
appeals 358–9, 361
apprising tactics 357, 361
case examples 362–3
coalition tactics 360–2
collaboration 359
consultation 358, 361–2
effectiveness of tactics 361–2
exchange tactics 358–9, 361
ingratiation 359–62
leadership 349–65
legitimating tactics 360–1
participation 445–6
pressure tactics 360–2
proactive tactics 357–61
rational persuasion 357, 361–2
bindex.indd 641 6/17/09 8:14:21 PM
INDEX 641
informal recognition 240–5, 247
information
control over 353
decision making 470
electronic technology 192–3
formal/informal learning 434–5
group process 310–13
integrity of leaders 396
job-related 85
participation 445–59
power 353
recognition 241–2
self-effi cacy 185–6
teams 283, 335–6, 339
trust 397
informational justice 258
information technology (IT) 595–614
see also technology
broadband networks 596
case examples 606–10
communication 596–7, 599–601
competition 602–3
decision making 599–601
digital product components 604–5
emerging technologies 596–8
implementation failure 605–6
industry structuring 602–3
Internet 596–7, 602–4
management support 605–6
miniaturizing resources 596
mobile devices 597
new business models 603–5
operational effi ciency 598–9
organizational change 598–605
trend implications 597–8
wireless technology 597
ingratiation 359–62
injustice see organizational justice
innovation
see also creativity
creativity 482
organizational structure 410, 412–13
self-effi cacy 183
trust 391
inquisitors 521–3
insomnia 264–5
inspiration 358, 370, 374–5
integrated product development (IPD) 338–9
integrity 22–3, 389–404, 437
see also moral values
Intel 601
intellectual capital 137
intelligence 3–17
case examples 11–14
conscientiousness 20, 21, 33–4
creativity 482
defi nitions 3–5
emotional stability 20, 21, 33–4
general mental ability 4–14
GMA-based hiring 6–11
too high for job 8–9
job performance 3–17
meta-analysis 3
range restriction bias 4–5
selecting employees 3–17
interactional justice 257–61
interdependent self 621–2
interests, conflict of 518
Internet 596–7, 602–4
see also emails; technology
interpersonal facilitation 21
interpersonal justice 258
interpersonal performance 30
interpersonal practices 618, 624–5
interviews 41–56
applicants
answers 46–7, 50–1, 56
decisions 44–5, 48–9
ratings 47
case examples 49–52
evaluations 43–4, 45–7, 56
goal identifi cation 46
interviewer decisions 43–4, 47–9
preinterview information 48
scoring criteria 46–7
structuring 41–56
intra-team confl ict 327–46
intrinsic motivation 481–2, 484–5
introspection 149–52, 154
intuition see collective intuition
IPD (integrated product development) 338–9
IP V6 (internet protocol) 597
irrational behavior 525–9
Israeli work culture 626–8
IT see information technology
Iverson, Ken 157
Japan
management practices 452–3
work culture 616, 619–21, 624, 627–8
bindex.indd 642 6/17/09 8:14:21 PM
642 INDEX
JCM ( Job Characteristics Model) 108–11,
113–14
J.Crew 155
JDS ( Job Diagnostic Survey) 109–11
Jehn, Karen A. 327–46
job analysis 30–1, 46
job attitudes 124–9, 136
see also attitudes
Job Characteristics Model ( JCM) 108–11,
113–14
job design 202–4
Job Diagnostic Survey ( JDS)
109–11
job embeddedness 130–1, 136
job enlargement 112
job enrichment 112–13, 181
job performance 3–17
see also performance . . .
case examples 11–14
employee attitudes 10
general mental ability 4–14
GMA-based hiring 6–11
intelligence 3–17
job satisfaction 108
predicting performance 5–6
selection 3–17
trust 391
turnover 134–5
variability 7
job rotation 111–12
job satisfaction 107–21
case examples 117–18
conscientiousness 27–8
emotional stability 27–8
goal setting 163
increasing challenge 111–13
JCM 108–11
mental challenge 107–21
moderators 114–17
participation 447
procedural justice 259
turnover 124–8, 136
job sharing 585–6
Jobs, Steve 537, 540, 549, 559, 561
Job Stress Survey ( JSS) 502
Joie de Vivre Hospitality 126
JSS ( Job Stress Survey) 502
judges 522–3
Judge, T. A. 26, 107–21
justice see organizational justice
Kampen Company case example 438–40
Karpenter Corporation case example 487–91
Keeney, Ralph 476–7
Keith, N. 170
KEYS: Assessing the Climate for Creativity 487
Kirkpatrick, S. A. 367–87, 448
Klinger, Ryan 107–21
knowledge 284, 311–12, 445–59
see also knowledge, skills and attitudes
knowledge, skills, abilities and other
characteristics (KSAOCs) 46
knowledge, skills and attitudes (KSAs)
affective integration 332
pay for performance 222
training 62, 70–1, 73–5, 78
Kokai watch, TQM 471
KSAOCs (knowledge, skills, abilities and other
characteristics) 46
KSAs see knowledge, skills and attitudes
Kushnick, Helen 526–9
Lad and Hooker beer 572–4
Larrick, Richard P. 461–80
Lasswell, H. D. 426
The Late Show (Carter) 526
Latham, G. P. 161–78, 189–90, 448
Lawler, E. E. 224
Lax, D. A. 519
Lazarus, R. S. 500, 503–4, 509
leadership 201–16
authoritarian 510
communication 433–4
conscientiousness 23
effectiveness 355–6
emotional issues 23, 157–8
fostering trust 389–404
group process 319–20
infl uence 349–65
integrity 396
organizational change 542–3
pet ownership study 468–9
power 349–65
stress 510
teams 275–93
values 375–83
vision statements 367–75, 378–80
learned optimism training 511–12
learning
see also training
blended learning 65, 75–6
bindex.indd 643 6/17/09 8:14:21 PM
INDEX 643
communication 434–5
formal/informal 434–5
goal setting 168–9, 171
intelligence 5
pay for performance 227
Lee, Thomas W. 123–42
legal compliance, employee selection 24
legal risks, hiring systems 9
legitimate power 350–1
legitimation, infl uence 360–1
Leno, Jay 526–9
Letterman, David 526, 528
Leventhal, G. S. 256–7, 259
life happiness/satisfaction 28–9, 108, 158
Lincoln Electric 91
Linux software 604
listening 427–8
Locke, E. A. 115–16, 145–59, 172, 448, 504
Lockheed Aircraft Corporation 416
logistics and transportation company case
example 398–400
longevity 24–5
Lotus Notes software system 600
loyalty 138
Lulofs, R. S. 436
lump-sum bonuses 218
Luthans, Fred 239–53, 517
Macan, T. H. 47
McGrath, Joseph 276
Maertz, C. P. Jr. 127
management
employee-related 622–3
global culture 615–32
MBO seminars 572
MBWA 136
practice 202, 204, 615–32
role of manager 517–35
stress 499, 510
support for IT 605–6
teams 314, 316–17, 374
vision statements 374
Management by Objective (MBO) seminars 572
management by wandering around (MBWA) 136
managers 499, 517–35
manner of communication 428–9
manufacturing case examples 248–9
masculine cultures 620–1
Maslach Burnout Inventory (MBI) 502
mastery, guided skills 186–93
matrix organizational structures 416–18
MBI (Maslach Burnout Inventory) 502
MBO (Management by Objective seminars) 572
MBWA (management by wandering around) 136
meat-packing case example 249–50
mechanistic work design 114
mediation 517–35
see also negotiation
behavior types 524
emotions 151
failure to use 523
high/low confl ict levels 526
by managers 521–6
mode usage effects 523
principles 525
quick interventions 526
Sheppard’s system 521–3
substantive interventions 524–5
third party roles 521–2, 525
medical instrument case example 626–7
mentally challenging work 107–21
mergers 138
merit pay plans 217–19
Microsoft 565, 569
Middendorf, C. H. 47
MidState Analytics case example 380–3
Millman, Z. 168
mindsets 510–11
Mitchell, Terence R. 123–42
Moag, J. S. 257
mobile devices, IT 597
moods 146–8, 155–6
moral values 375
Morgeson, F. P. 110
Morton, Gorry 599
Morton, Scott 599
motivation
collaboration 333–5
conscientiousness 26–7
decision making 42–5
emotions 26–7, 151
extrinsic 481–2
global culture 624–5
goal setting 161–78
intrinsic 223, 481–2, 484–5
non-financial 223, 227
participation 446–7
reward allocation 624–5
self-effi cacy 180–1
vision statements 371–2, 374–5
bindex.indd 644 6/17/09 8:14:22 PM
644 INDEX
Motorola 471
Mount, Michael K. 19–39
multicultural teams 625–6
multicultural vision statements 373
multi-source feedback systems 88–9
munifi cence 560, 568–9
mutual agreement 408–9
Nahrgang, J. D. 109–10
NASA (National Aeronautics and Space
Administration) 606–8
national cultures 615–32
Navigation Products 545
Navy, US 77–8
need rule, reward allocation 625
needs analysis 60–3, 78–9
negotiation 517–35
see also confl ict
case examples 526–9
collaborative 519–21
communication 430
irrational behavior 525–9
by managers 519–21
mediation 521–6
principles 519–20
recommendations 519–20
reconciling interests 519–21
self-effi cacy 188
Nelson, B. 246, 248
NEO Personality Inventory 31
neuroticism 20, 25, 27–8
newcomers to organizations 435–6
New York taxi driver safety rules 265–6
Ngai, P. B.-Y. 430
NGT (Nominal Group Technique) 450
Nipont case example 420
nominal groups 450, 471
Nominal Group Technique (NGT) 450
Nordstrom department store 377
Norman, Archie 551–2
note-taking 47
NRG Systems 132
nurse insomnia study 264–5
OB Mod. (Organizational Behavior
Modifi cation model) 243, 248
O’Brien, Conan 528
OCB (organizational citizenship behavior) 21,
86–7, 264
O’Connor, M. 285–6
oil industry case examples 302–4
Okhuysen, Gerardo A. 309–25
Oldham, G.R. 109
openness 29, 332–3
optimism 183–4, 511–12
optimization, SOC 587–9
O’Reilly Coated Materials case example
487–91
organic structures, innovation 412–13
Organizational Behavior Modifi cation model
(OB Mod.) 243, 248
organizational change 537–55
alignment 539–41
Apple Computer 537–45, 549
barriers to change 545–6
capabilities necessary 537–9
case examples 549–51
communication 547
complexity of systems 539–40
consistency 543
corporate-wide change 548–9
culture 540–1
dissatisfaction 542–3
energy mobilization 544–5
guideline universality 551–2
IT 598–605
leadership 542–3
monitoring progress 548
new directions 545–6
people involvement 547
resistant behavior 541–2
seven step model 543–8, 551–2
successful change 543–8
support for change 547–8
vision for success 546–7
organizational citizenship behavior (OCB) 21,
86–7, 264
organizational justice 255–71
case examples 265–6
distributive 255–6, 259
exceptions 262–4
forms 255–8
implementation issues 264–5
interactional 257–61
outcome valence 262
principles 258–61
procedural 256–60
social sensitivity 263–4
special cases 262–4
training managers 264–5
bindex.indd 645 6/17/09 8:14:22 PM
INDEX 645
trust 395
having a voice 262–6
organizational structure 407–24
case examples 418–20
contingencies 409–18
coordination mechanisms 408–9, 413
diversifi cation 410, 413–18
geographical diversity 410, 417–18
innovation 410, 412–13
size of organization 409–12
strategy 407–24
task uncertainty 408–9, 413
outcome X process interaction, justice 262
pacing group process 309–25
Page, Larry 559–61
paralanguage 428–9
“parenting”, corporate 417
participation 445–59
case examples 451–3
cognitive studies 448–9
complexity of task 447, 449–50
effectiveness 450–1
group size 447
implementation 450–1
infl uence on behavior 445
infl uence sharing 446
information sharing 445–59
interdependence 449
job satisfaction 447
moderators 449–50
motivation 446–7
stability of context 450
part-time work 585–6, 591–2
passion 481–97
past behavior description question format
46, 50–1
Patten, B. 519
pauses in communication 430–1
pay for performance systems 217–38
see also performance . . .; wages
attraction patterns 221
best practice 221
case examples 227–31
communication 222
competence 222
culture of organization 225
defi nition of performance 222
exceptions 227
global pay 230–1
individuals 217–19, 224, 227–8
intrinsic motivation 223
making systems work 222–6
management purpose 225
measuring performance 225
monitoring 227
nature of task 224–5
non-financial motivators 223
organizational level 219–21, 229–30
retention patterns 221
risk levels 226
targeting correct levels 224–6
teams 219, 224–6, 228–9
values of employees 223
PCI (Personal Characteristics
Inventory) 31
Pearce, Craig L. 201–16
peer appraisals 88–9
PepsiCo 289
perceptions 372, 586–7
performance
see also job performance; pay for
performance
contextual 6
goal setting 161–78
improvement 239–53, 544
organizational change 537–55
predictors 20–1, 26–30, 33, 46
recognition 239–53
teams 284
training 61–2, 69
vision statements 368–9
performance appraisals 85–104
accuracy of information 86–92
behaviorally based 89–91
case examples 96–9
categories of performance 87
coaching employees 95–6
definition of performance 86–7
feedback sources 88–9, 91
goal setting 93
improving performance 92–6
meeting with employees 94
observing/recording performance 87
poor performers 96
procedural justice 259
self-assessment 94–5
teams 283
training raters 92
two-way communication 93–4
bindex.indd 646 6/17/09 8:14:22 PM
646 INDEX
perseverance see tenacity
Personal Characteristics Inventory (PCI) 31
personal identifi cation 354
personality 19–39, 116, 397
personal power 349–50, 355–6, 362
personal resources, stress 503
personal values 375
persuasion 357, 361–2
Peterson, R. S. 263
pet ownership study 468–9
Pfeffer, J. 225
Philip Morris plant case example 13–14
physical state, self-effi cacy 185
piece-rate pay plans 217–18
planning/plans 408, 598–9, 606
police force case example 11–12
political aspects 9–10, 286–8, 472–3
pooled task interdependence 409
position power 349–50, 355–6, 362
positive affect 484
power 349–65, 609
see also empowerment
case examples 362–3
confl ict 518
effectiveness 355–6, 361–2
exercise of 356–61
infl uence 349–65
leadership 349–65
power distance 620
proactive tactics 357–61
role modeling 355
types 349–55
PowerPad technology 609
predicting behaviors 20–5, 33–4, 468–9
see also performance, predictors
presentations 426–7
pressure tactics 360–2
pretraining transfer analysis 69
preventive coping 504–6, 508–9
Priceline.com 604
Priestley, Joseph 462
proactive coping 504–6, 510–12
problem-solving 484
procedural justice 256–60, 395
product development case example 419
professionalization 617
profi t sharing 219–20
Progressive Auto Insurance 602
property management case example 118
psychological safety 315
punishment 352–3
quality 210–11, 452, 462, 469–71
Quality Circles 452
question formats in interviews 45–7, 50–1
Quigley, N. R. 448
rapport-building 45, 47–8
rating job performance 85–104
rationalization, global culture 617
rational persuasion 357, 361–2
rational role of leader 157–8
reactive coping 504–5, 509
Reality Show 321
real-time information 311–13
reason and emotions 149–51, 157–8
recognition 239–53
case examples 248–51
formal programs 239–40, 245–6, 247
implementation 246–8
informal 240–5, 247
moderators 244–5
outcome utility 241
self-effi cacy 245
social cognitive theory 240–2
survey 244
reconciliation 519–21
recruitment 41–56
see also hiring employees
Red Algae case example 627–8
reemployment programs 188–9
referent power 354–6
reinforcement 239–41, 247–8
relationships 327–30, 390–1, 432–4
report writing 278
repressing emotion 152–3
requests 350–1, 356
resilience 188–9
resistance to power 356
resources
creativity 486–7
entrepreneurship 560, 569
ERP 400, 598–9, 606–8
goal setting 168
SOC 590
stress 503
respect 332
response-based stress measures 502
results-based performance appraisal 91
Reuter, Tabea 499–515
rewards
see also bonuses
global culture 624–5
bindex.indd 647 6/17/09 8:14:22 PM
INDEX 647
goal-based 572
power 202–3, 351–2
teams 283
rights 518
Ringi decision making 452
risk
creativity 485
decision making 468
hiring systems 9
neuroticism 25
pay for performance 226
stress 505–6
Rogers, Don 547
role modeling 355, 375
rotation of jobs 111–12
Rotundo, Maria 85–104
rules 408
Saari, L. M. 189–90
safety 24, 265–6, 315
psychological 315
Salam, Sabrina C. 389–404
Salas, Eduardo 59–84
sales commissions 217–18
sand dune teams 280
Santa Rosa Systems Division, Hewlett Packard
549–50
satisfaction 27–9
see also job satisfaction
Saturn job enrichment
program 113
scapegoating 433–4
Schmidt, Frank 3–17
Schwarzer, Ralf 499–515
Scott, L. R. 565
Scott Paper 552
screening applicants 48, 50–1
Scully, J. 448, 537, 539, 542–5
Seagate Technology 476–7
Sebenius, J. K. 519
selection of employees 3–56
Selection, Optimization and Compensation
(SOC) 587–90
self-appraisal 183–4
self-assessment 94–5
self-confidence 207, 372
see also self-effi cacy
self-effi cacy 179–200
coaching 167
development 184–93
empowerment 202, 204–6
entrepreneurship 182, 560,
566, 571
functional properties 179–81
goals 163, 165–7, 180, 193–4
guided skills mastery 186–93
independent self 622
motivation 26
organizational impact 181–4
outcome expectations 180
pay plans 226
recognition 245
self-regulation 193–4
stress 183, 503, 505–6
unproductive ventures 183
self-evaluation 116
“self-handicapping” paradox 27
self-management 193–4, 286
see also self-regulation
self-monitoring 30
self-regulation 172, 193–4
self-report personality tests 31–2
self-sacrifi ce 377
self-satisfaction 193–4
self-talk 167–8
semiconductor manufacturing case example
286–8
Shannon, C. E. 426
shared meaning systems 372, 617, 619
sharing jobs 585–6
Shaver, K. G. 565
Shelley, M. 226
Sheppard, B. H. 521
Sheppard’s mediation classifi cation system
521–2
shocks affecting turnover 126–9, 136
silences in communication 429–30
Simpson, Jerry 545
situational questions 46
situational specifi city, theory of 3, 5
Six Sigma 462, 469–70
size of organization 409–12
skills 186–93, 284, 483
see also knowledge, skills and attitudes;
KSAOCs
SMART goals 171
Smith, Fred 565
smoking bans 261–2
social capital 137
social cognitive theory 184–5, 240–2
social environment 464–5
social identity theory 622
bindex.indd 648 6/17/09 8:14:23 PM
648 INDEX
social loafi ng 626
social modeling 185
social persuasion 185
social resources, stress 503
social sensitivity, justice 263–4
social support for stress 507
social value orientations 334
SOC (Selection, Optimization and
Compensation) 587–90
speaking 427–8
specialization 410–11
Spielberger, C. D. 502
stability
see also emotional stability
workforce 137–8
Stagl, Kevin C. 59–84
Stajkovic, Alexander D. 239–53
standards of training 75
start-ups 562
Staub, Marlan 574–5
steel plant case example 11
Steiner, I. D. 284
Stevens, Cynthia Kay 41–56
stimulus-based stress measures 502
stock ownership 219–21
Stolzfus, Hans 572–4
Stolzfus, Heinrich 572–4
store manager case example 266
stress 499–515
antecedents 503
assessment 501–2
case examples 508–12
cognitive-transactional
theory 500–1
coping strategies 499–515
demands/resources 503
dimensions of coping 503–4
experience of 500
individual coping 508–12
injustice 260–1
management programs 510
organizational approaches 506–8
perspectives on coping 504–6
poor work adjustment 502
process model 501
resources 503
role analysis 507
self-effi cacy 183, 503, 505–6
at work 500–8
work-family balance 582–3
structure
interviews 41–56
see also organizational structure
student internship study 464
student poster study 474
success 189–91, 559–78
Successfactors 134
supervisory encouragement 483
supervisory skills 190
supply chain management, IT 602
support systems
leader benevolence 394–5
stress 507
teams 283–4, 483
technology 451, 599–601, 605–6
suppressing emotion 153–4
surgical teams 279
Surowiecki, J. 471
swiftness 559–78
Taiwan 431
Take the Best (TTB) decision making
strategy 473
“taking charge” 260
task activities 432–4
task behaviors 21
task confl ict 309–25
see also confl ict
Abilene Paradox 313–14
collaboration 327–30
creating confl ict 314–15
“devil’s advocacy” role 315–16
exploiting confl ict 315–16
familiarity 312–13
framebreaking heuristics 315–16
Groupthink 314
multiple alternatives 314–16
positive outcomes 315–16
productive confl ict 312–16
psychological safety 315
real-time information 313
team composition 314
well-rehearsed roles 315
task interdependence 409, 413
task-oriented practices 618
task uncertainty 408–9, 413
taxi driver safety rules, NY 265–6
Taylor, M. Susan 517–35
TDS (Team Diagnostic Survey) 293
teacher stress case example 508–9
bindex.indd 649 6/17/09 8:14:23 PM
INDEX 649
Team Diagnostic Survey (TDS) 293
teams 275–346
see also boundary activities of teams; group
process
affective integration 332, 338
appropriacy 277–8
boundary activities 295–307
case examples 286–8
coaching 281, 284–6
collaboration 327–46
collective effi cacy 331–2
communication 296, 332–3, 335–6, 433–4
competence 300
composition of team 282–3, 314
conduct norms 283
confl ict management 327–46
conscientiousness 22
cooperative members 333–5
creativity 483, 485, 487
cross-functional 471
direction 282
effectiveness 275–93
effort 284
emotional stability 22
epistemic motivation 334–5, 339
external issues 295–307
facilitating conditions 280–6
enablers 281, 282–6
essentials 280–2
framing activities 331, 338
global culture 625–6
goals 331
individualistic members 333–4, 338
information 283, 335–6, 339
knowledge 284
launching 288–90
leadership 275–93
member behavior 335–7
multicultural 625–6
negotiators 520–1
orientation of team 331–4
pay for performance 219, 224–6, 228–9
performance 283–4
principles 276–86
process gains/losses 284, 286
real teams 281
right people 281
selection of 487
self-effi cacy 182
skills 284
social value orientation 334
stress 507
structure 282–3, 314
studies of teams 286
supportive context 283–4
types 278–80
virtual 279, 601, 625–6
well-composed 283, 286
well-designed tasks 282
wrong leadership styles 290
technology
see also information technology
communication 431–2
group participation 450–1
industry dynamism 568
performance appraisals 87, 89
virtual teams 279, 601, 625–6
telecommunications case example 78–9
telecommuting 584–5
teller line case example 250–1
tenacity 560, 565–6, 570
Terracciano, A. 25
text messaging 431
theft 260–1
Thibault, J. 256–7, 259
timing issues 316–19, 429–32, 486
Tonight Show 526–9
“top down” processes 466–7
Total Quality Management (TQM) 462,
469–71
Toyota Motor Corporation case examples 419,
452–3
TQM (Total Quality Management) 462,
469–71
trade-offs 336, 339, 473
traditional incentive plans 217–18
training 59–84
see also learning
analyzing needs 60–3
assessment tools 64, 73–4
case examples 77–9
content 63–4, 71–4
CRM naval training 78
design 59–84
evaluation 66–8, 76–7
goal setting 172–3
impact of 68
implementation 65–6, 74–6
learning architecture 63, 71–2
maintaining skills 66, 76
bindex.indd 650 6/17/09 8:14:23 PM
650 INDEX
training (Continued)
organizational justice 264–5
performance raters 92
programs 23, 29, 47–8
results dissemination 68
science of 59–84
self-effi cacy 181
stage-setting for learning 65, 74–5
transfer of skills 66, 76, 189–91
University of Washington 172–3
transfer of skills 66, 76, 189–91
transportation company case example 398–400
True Value Company 227–8
trust 389–404
affective integration 332, 338
benefi ts 390–2
case examples 398–401
communication 391, 393, 396, 436–7
culture of 392–4
fair procedures 393
follower personality 397
implementation 392–6
leadership 394–6
organizational justice 395
TTB (Take the Best) decision making
strategy 473
Tufte, E. R. 476
turnover 123–42
action implications 134–6
avoidability 135–6
building loyalty 138
case examples 126, 129–32, 134
complementary approaches 123–33
focus on staying 130–2
functionality 133–5
job attitudes 124–9, 136
low rates 22–3
managing turnover 132–3
non-job-specific behavior 134–5
shocks/psychological paths 126–9, 136
traditional theories 124–7
types of organizations 138
unfolding model 124, 126–30, 135–6
withdrawal cognitions 124–6, 136
workforce stability 137–8
Twenty Statement Test 621–2
uncertainty 169–70, 408–9, 562, 620
unconscious decision making 474
unfolding turnover model 124, 126–30, 135–6
unionized companies 227
United States (US) 11–13, 77–8, 416, 421
university fundraising case examples 362–3
University of Washington 172–3
upward appeals, infl uence 361
Ury, W. L. 518–19
US see United States
USA Today 416
validity
personality traits 32, 34
preinterview information 48
value appraisals 145–7, 150
values 375–83
case examples 378–83
global culture 619
implementation 376–7
integration into systems 377
job satisfaction 115–16
leadership 375–83
modeling 376–7
pay for performance 223
stating values 376
variable pay plans 217–18, 221, 226
verbal self-guidance (VSG) 167–8
veridical self-appraisal 183–4
vertical loading, job satisfaction 112–13
vertically integrated companies 414–15
veteran employees 435–6
videoconferencing 451, 601
Vinokur, A. D. 188–9
Virgin Group 208
virtual reality, IT 604
virtual teams 279, 601, 625–6
see also distributed teams
vision statements 367–75, 378–80
case examples 378–80
characteristics 369–70
communication 367–8, 373–4
effectiveness 371–3
follower attitudes 369, 372, 374–5
implementation 374–5
job perceptions 372
leadership 367–75, 378–80
management teams 374
multicultural settings 373
performance 368–9
research 371
role modeling 375
shared meaning 372
bindex.indd 651 6/17/09 8:14:24 PM
INDEX 651
symbols/images 375
wireless technology 597
uniqueness 370–1
Wisdom of Crowds (Surowiecki) 471
voice, having a 262–4, 265–6
withdrawal 108, 124–6, 136
voluntary turnover 123–42
women and communication 430
Volvo case examples 117–18, 451–3
work cultures 616–21, 624,
VSG (verbal self-guidance) 167–8
626–8
work environment 483–7, 507
Wageman, R. 225, 275–93
work-family balance 581–94
wages 23–4, 109, 230–1
case examples 590–2
see also pay for performance
confl ict 581–3
Wagner, John A. III 445–59
individual strategies 587–90
Walker, L. 256–7, 259
organizational strategies 583–7
Wall Street Journal 471–2
workforce stability 137–8
Wal-Mart 600, 602
see also stability
Walt Disney Company 377
workgroup support 483
Walton, Sam 564–6, 569
see also support systems
Washington DC police force case example
work interfering with family
11–12
(WIF) 581–3
Weaver, W. 426
work relationships 390–1
Weingart, Laurie R. 327–46
see also relationships
Welch, Jack 208–9
work schedules 507
defensiveness 157
work teams 276–86
Leno case example 528
see also teams
organizational change 544, 549, 552
The World is Flat (Friedman) 615
training 79
writing reports 278
Western Electric, US 446
Weyerhaeuser Company 163, 169
XYZ Company 591–2
WIF (work interfering with family) 581–3
“will do” factors, employee selection 19
Yahoo! 129–30
Winfrey, Oprah 559, 561
Yoo, Youngjin 595–614
Winters, D. 448
Yukl, Gary 349–65
