Organizational Behavior
Read this section for an overview of organizational behavior, defined as a systematic study of how individuals and groups act within the organizations where they work. As you read, think about how organizational behavior is related to organizational success. Also, look for the trends in organizational behavior (OB), since we will discuss these trends again in the course.
Trends and Changes
Learning Objectives
- Understand current challenges for OB.
- Understand current opportunities for OB.
Challenges and Opportunities
There are many trends within the workplace and around the globe that have and will continue to affect the workplace and your career. We are sure you have noticed many of these trends simply by reading newspaper headlines. We will highlight some of these trends along with the challenges and opportunities they present for students of organizational behavior.
Ethical Challenges
Business ethics refers to applying ethical principles to situations that arise at work. It feels like it's been one ethical scandal after the other. Enron Corp., AIG, Tyco International, WorldCom, and Halliburton Energy Services have all been examples of what can be described in terms ranging from poor judgment to outright illegal behavior. The immediate response by government has been the Sarbanes-Oxley Act, which went into effect in 2002. This act consists of 11 different requirements aimed at greater accountability, which companies must comply with in terms of financial reporting. And while there may be some benefit to businesses from complying with these rules, few see this as the long-term solution to dealing with unethical behavior. The challenge is to continue to think about business ethics on a day-to-day basis and institute cultures that support ethical decision making. The opportunity for organizations to be on the forefront of ethical thinking and actions is wide open. OB research finds that the most important determinant of whether a company acts ethically is not necessarily related to the policies and rules regarding ethical conduct but instead whether it has a culture of consistently ethical behavior and if leaders are committed to this ethical behavior.
OB Toolbox: Take an Ethics-at-Work Audit
- Do you integrate ethics into your day-to-day decisions at work? It's easy to think about ethics as something big that you either have or don't have, but the reality is that ethical decisions are made or not made each and every day.
- Do you take the "front page" test when making important decisions at work? Thinking about how you would feel if the decisions you are making at work showed up on the front page of your local newspaper can help you avoid engaging in questionable behavior.
- Do you role model ethics at work? Seeing others engage in unethical behavior is the start of a slippery slope when it comes to ethics. Consider the decisions you are making and how they are consistent or inconsistent with how you would like to be seen by others.
- Do you consider if rewards are distributed ethically at work? Situations in which there are "haves" and "have nots" are breeding grounds of unethical behavior. Maintaining pay equity can help keep everyone more honest.
- Have
you held a "risk brainstorm" at work? If you ask those around you if
they see any situations that are challenging ethical behavior, you can
uncover some seriously risky situations and avoid them.
Lack of Employee Engagement
Studies
suggest that fostering engagement, a concept related to passion, in
employees has a significant impact on the corporate bottom line. Gallup,
for instance, has been on the forefront of measuring the impact of what
is called employee engagement. Employee engagement is a concept that is
generally viewed as managing discretionary effort, that is, when
employees have choices, they will act in a way that furthers their
organization's interests. An engaged employee is a person who is fully
involved in and enthusiastic about their work. The
consulting firm BlessingWhite offers this description of engagement and
its value: "Engaged employees are not just committed. They are not just
passionate or proud. They have a line-of-sight on their own future and
on the organization's mission and goals. They are 'enthused' and 'in
gear' using their talents and discretionary effort to make a difference
in their employer's quest for sustainable business
success".
Engaged
employees are those who are performing at the top of their abilities
and happy about it. According to statistics that Gallup has drawn from
300,000 companies in its database, 75%–80% of employees are either
"disengaged" or "actively disengaged".
That's
an enormous waste of potential. Consider Gallup's estimation of the
impact if 100% of an organization's employees were fully engaged:
- Customers would be 70% more loyal.
- Turnover would drop by 70%.
- Profits would jump by 40%.
Job
satisfaction studies in the United States routinely show job
satisfaction ratings of 50%–60%. But one recent study by Harris
Interactive of nearly 8,000 American workers went a step
further. What did the researchers
find?
- Only 20% feel very passionate about their jobs.
- Less than 15% agree that they feel strongly energized by their work.
- Only 31% (strongly or moderately) believe that their employer inspires the best in them.
It is clear that engagement is both a challenge and an opportunity for OB.
Technology
Technology has transformed the way work gets done and has created many great opportunities. The nexus of increasing personal computing power, the Internet, as well as nanotechnology are allowing things to be created that weren't even imaginable 50 years ago. And the rate of technological change is not expected to slow down anytime soon. Gordon Moore, a cofounder of Intel Corp., shocked the world in 1975 with what is now termed Moore's Law, which states that computing power doubles every 2 years. This explains why a 4-year-old computer can barely keep up with the latest video game you have purchased. As computers get faster, new software is written to capitalize on the increased computing power. We are also more connected by technology than ever before. It is now possible to send and receive e-mails or text messages with your coworkers and customers regardless of where in the world you are. Over 100 million adults in the United States use e-mail regularly (at least once a day and Internet users around the world send an estimated 60 billion e-mails every day, making e-mail the second most popular medium of communication worldwide, second only to voice. Technology has also brought a great deal of challenges to individuals and organizations alike. To combat the overuse of e-mail, companies such as Intel have instituted "no e-mail Fridays," in which all communication is done via other communication channels. The technology trend contains challenges for organizational behavior.
Flattening World
Thomas
Friedman's book The World Is Flat: A Brief History of the Twenty-First
Century makes the point that the Internet has "flattened" the world and
created an environment in which there is a more level playing field in
terms of access to information. This access to information has led to an
increase in innovation, as knowledge can be shared instantly across
time zones and cultures. It has also created intense competition, as the
speed of business is growing faster and faster all the time. In his
book Wikinomics, Don Tapscott notes that mass collaboration has changed
the way work gets done, how products are created, and the ability of
people to work together without ever meeting.
There
are few barriers to information today, which has created huge
opportunities around the globe. Marc Andreessen, cofounder of Netscape
Communications Corporation, notes, "Today, the most profound thing to me
is the fact that a 14-year-old in Romania or Bangalore or the Soviet
Union or Vietnam has all the information, all the tools, all the
software easily available to apply knowledge however they
want". Of course,
information by itself is not as important as having the right
information at the right time. A major challenge for individuals in the
flattened world is learning how to evaluate the quality of the
information they find. For tips on how to evaluate the quality of
information, see the OB Toolbox below.
OB Toolbox: Tips for Evaluating the Quality of Information
Here are a few Internet resources to refer to when evaluating information you find on the Web:
- http://www.library.jhu.edu/researchhelp/general/evaluating/
- http://www.uwec.edu/Library/tutorial/mod5/
- http://www.librarysmart.com/working/LSPublic/01_evaluate.asp
Sustainability and Green Business Practices
Figure 1.8
![](https://learn.saylor.org/pluginfile.php/3776688/mod_book/chapter/31562/1.8.jpg)
Social
responsibility is not just something organizations do at the price of
profits. It can also lead to superior results. Environmentally Neutral
Design (END) has designed a shoe that reduces the amount of material
needed so it costs less to produce and is the lightest performance shoe
on the market.
The
primary role of for-profit companies is to generate shareholder wealth.
More recently, the concept of the triple bottom line has been gaining
popularity. Those subscribing to the triple bottom line believe that
beyond economic viability, businesses need to perform well socially and
environmentally. While some organizations have embraced the concepts
underlying the triple bottom line, businesses are also undergoing a
great deal of "greenwashing," which refers to the marketing of products
or processes as green to gain customers without truly engaging in
sustainable business practices. Sustainable business practices are those
that meet the present needs without compromising the needs of future
generations. The challenge is to reconcile the accountability that
publicly owned firms have in generating wealth for their shareholders
while attending to the triple bottom line. On the other hand,
organizations also have an opportunity to leverage a proactive stance
toward innovative processes that can result in even greater profits for
their products. For example, sales of the Toyota Prius, which combines
combustion engine efficiency with hybrid electric technology, have been
dramatic and have helped propel Toyota to record market share and
profits. An unlikely leader in the sustainability movement is Wal-Mart.
Wal-Mart hired Adam Werbach, the former president of the Sierra Club, to
help train 1.3 million North American Wal-Mart employees about
sustainability. Wal-Mart has also been pressuring suppliers to produce
compact fluorescent lightbulbs with less mercury and has slashed the
resources needed in packaging by requiring all suppliers to make
packages smaller. In
the future, increasing interdependence between businesses, governmental
agencies, and NGOs is bound to effect change throughout the
economy.
Aging Workforce and the Millennial Generation
You
have probably heard that the American workforce is aging. Over the next
30 years, 76 million baby boomers will retire, but there will only be
46 million new workers from Generations X and Y entering the labor
force. This demographic trend creates both challenges and opportunities
for organizations.
The
aging trend has been predicted for decades. "The number of U.S. workers
over the age of 40 has increased significantly over the past 30 years.
By 2010, more than 51% of the workforce will be 40 or older, up almost
20% over 30 years. At the same time, the portion of the workforce aged
25 to 39 will decline by nearly 3%. The number of workers aged 55 and
older will grow from 13% of the labor force in 2000 to 20% in
2020". There will be
record numbers of retirements. Aging workforces can create great
opportunities for industries such as health care, but it can also mean
great challenges lie ahead as entire industries related to basic
infrastructure face massive retirement projections. For example,
everything from air traffic controllers to truck drivers are predicted
to be in huge demand as thousands of retiring workers leave these
industries at roughly the same time.
Figure 1.9 Percentage of Labor Force by Age Group for 2004 and Projections for 2014
![](https://learn.saylor.org/pluginfile.php/3776688/mod_book/chapter/31562/1.9.jpg)
The
Millennial Generation (which includes those born between 1980 and 2000)
differs from previous generations in terms of technology and
multitasking as a way of life. Having never known anything different,
this population has technology embedded in their lives. In addition,
they value teamwork, feedback, and challenging work that allows them to
develop new skills. If you are in this generation or know those who are,
you know there is an expectation of immediate interaction. The challenge for
organizational behavior is to keep individuals from different
generations communicating effectively and managing people across
generational lines despite different values placed on teamwork,
organizational rewards, work–life balance, and desired levels of
instruction.
The Global Marketplace for Staffing: Outsourcing
Figure 1.10
![](https://learn.saylor.org/pluginfile.php/3776688/mod_book/chapter/31562/1.10.jpg)
A shamrock organization includes an equal number of regular employees, temporary employees, and consultants and contractors.
Outsourcing
has become a way of life for many organizations - especially those
based in the United States that are outsourcing to other countries where
labor is relatively inexpensive. Outsourcing refers to having someone
outside the formal ongoing organization doing work previously handled
in-house. This practice can involve temporary employees, consultants, or
even offshoring workers. Offshoring means sending jobs previously done
in one country to another country. Nowhere is there more outsourcing and
offshoring than in the software technology industry. A survey of
software developers revealed that 94% outsource project work, and when
they offshore, the work most frequently goes to India, Singapore,
Russia, and China. Microsoft has been expanding their use of employees in Canada for a
variety of reasons such as closer proximity to Microsoft's headquarters
in Seattle, Washington, as well as similarity of language and time
zones. Across industries, more than 80% of boards of directors in the
United States have considered offshore outsourcing. Charles Handy, author of The Age of Paradox, coined the term shamrock
organization, which is an organization comprising one-third regular
employees, one-third temporary employees, and one-third consultants and
contractors. He predicts that this is where organizations are headed in
the future. The darker side of the changing trend in organization
composition revolves around potential unemployment issues as companies
move toward a shamrock layout. Fortunately, this shift also presents an
opportunity for organizations to staff more flexibly and for employees
to consider the tradeoffs between consistent, full-time work within a
single organization versus the changing nature of work as a temporary
employee, contract worker, or consultant - especially while developing a
career in a new industry, in which increased exposure to various
organizations can help an individual get up to speed in a short amount
of time. The challenge for organizational behavior is managing teams
consisting of different nationalities separated not only by culture and
language but also in time and space.
Key Takeaway
Trends include ethical challenges, rapid technological change, a flattening world, sustainable business practices, demographic trends, and the global marketplace. A number of trends will influence the way work gets done today and in the future. Understanding organizational behavior will help you anticipate and adapt to these changes as a lifelong learner.
Exercises
-
Share an ethical dilemma you have observed at work or school to
someone in your class. What do you think should have been done
differently and why?
- How has technology and the flattening world affected you in the last 10 years? Please share examples of this.
- Do you think the sustainability movement in business is a trend that's here to stay or a business fad? Why or why not?
- Do you see the aging (and retiring) workforce as an opportunity or a
threat for businesses? How do you think this will affect your career?