Unit 1: Introduction

Subunit 1: Nature, Scope, and History (Classical and Neo-Classical Era)

Definition and Basic Nature

● No matter how good a company’s products may be, there can be no company
without people.
● From the founder down to the lowest ranking employee, it’s all about people.
● People are a critical element in the effective functioning—indeed, the basic existence
—of organizations.
● This people-centered orientation is what the field of organizational behavior (OB for
short) is all about.
● Simply put, OB is the field specializing in the study of human behavior in
organizations.
● An organization is a structured social system consisting of groups and individuals
working together to meet some agreed upon objectives.
● The field of organizational behavior deals with human behavior in organizations.
● Formally defined, organizational behavior is the multidisciplinary field that seeks
knowledge of behavior in organizational settings by systematically studying
individual, group, and organizational processes.
● This knowledge is used both by scientists interested in understanding human
behavior and by practitioners interested in enhancing organizational effectiveness
and individual wellbeing.

4 characteristics central to OB:

1. Firmly grounded in the scientific method.
● OB knowledge is based on the behavioral sciences.
● Thus, it is based on systematic observation and measurement of the behavior or
phenomenon of interest.
● Scientific Orientation is a hallmark of the field of OB
2. OB studies individuals, groups, and organizations.
● In organizations people frequently work together in groups and teams.
● People—alone and in groups—both influence and are influenced by their work
environments.
● Thus, field of OB recognizes that all three levels of analysis must be considered to
comprehend fully the complex dynamics of behavior in organizations.
3. OB is interdisciplinary in nature.
● OB draws on a wide variety of social science disciplines.
● Rather than studying a topic from only one particular perspective, the field of OB is
likely to consider a wide variety of approaches.
● These range from the highly individual-oriented approach of psychology, through the
more group-oriented approach of sociology, to issues in organizational quality
studied by management scientists.
4. OB is used as the basis for enhancing organizational effectiveness and
individual well-being.
● Theory X Orientation: managers of a century ago held very negative views of
employees. They assumed that people were basically lazy and irresponsible, and
treated them with disrespect. Traditional view of management.
 ● Theory Y Orientation: assumes that people are not inherently lazy, but that they are
willing to work hard when the right conditions prevail. Strongly associated with
improving the quality of people’s work lives.

● The key reason to know about OB is simple—it matters.

● Not only does OB explain how people feel about their work, but importantly, how well
they perform. Studying OB provides important insight into work performance.
● Two key assumptions:
○ OB Recognizes the Dynamic Nature of Organizations: that organizations
are not static, but dynamic and ever-changing entities that organizations are
open systems: Self-sustaining systems that transform input from the external
environment into output, which the system then returns to the environment.
○ OB Assumes There Is No “One Best” Approach: OB scholars embrace a
contingency approach—an orientation that recognizes that behavior in work
settings is the complex result of many interacting forces.

OB Then and Now: A Capsule History

● It was only 100 years ago that people first became interested in studying behavior in
organizations, and only during the last 50 years that it gained widespread
acceptance.

The Early Days: Scientific Management and the Hawthorne Studies

● First attempts to study behavior in organizations came out of a desire by industrial
efficiency experts to improve worker productivity. Their central question was
straightforward: What could be done to get people to do more work in less time? This
question was posed in a period of rapid industrialization and technological change in
the United States.

SCIENTIFIC MANAGEMENT
● Frederick Winslow Taylor, an engineer.
● noticed the inefficient practices of the employees in the steel mill in which he worked
and attempted to change them
● Led Taylor to study the individual movements of laborers performing different jobs,
searching for ways to do them that resulted in the fewest wasted movements.
● Research of this type was referred to as time-and-motion studies.
● 1911, Taylor advanced the concept of scientific management, which not only
identified ways to design manual labor jobs more efficiently, but also emphasized
carefully selecting and training people to perform them.
● However, his approach was credited with destroying the soul of work and
dehumanizing factories by transforming men into automatons.
● Elton W. Mayo,an organizational scientist and consultant widely regarded as the
founder of what is called the human relations movement.
● This approach emphasized that the social conditions existing in organizations—the
way employees are treated by management and the relationships they have with
each other—influence job performance.
THE HAWTHORNE STUDIES.
● First investigations of organizational behavior- began in 1927 at Western Electric’s
Hawthorne Works near Chicago.
● Systematically altered key aspects of the work environment (e.g., illumination, the
length of rest pauses, the duration of the workday and workweek) to see their effects
on job performance.
● What they found was baffling: Productivity improved following almost every change in
working conditions.
● In another set of studies, workers sometimes restricted their output deliberately.
● Mayo recognized that how effectively people work depends not only on the physical
characteristics of the work environment, but also the social conditions encountered.
● Hawthorne Effect: the general tendency for people to behave differently than they
normally would simply because they believe they are being studied.
● Social forces in this setting proved to be more potent determinants of job
performance than the physical factors studied.

Classical Organizational Theory

● During the same time, another approach to managing people emerged.
● This perspective, known as classical organizational theory, focused on the efficient
structuring of overall organizations. The idea was that there is an efficient way to
organize work in all organizations.
● Henri Fayol, a French industrialist pioneered various ideas about how organizations
should be structured. For example, Fayol advocated that there should be a division of
labor, the practice of dividing work into specialized tasks that enable people to
specialize in what they do best.
● Max Weber, German sociologist who is well known for proposing the bureaucracy—
a form of organization in which a set of rules are applied that keep higher-ranking
organizational officials in charge of lower-ranking workers, who fulfill the duties
assigned to them.

Late Twentieth Century: Organizational Behavior as a Social Science

● The realization that behavior in work settings is shaped by a wide range of individual,
group, and organizational factors set the stage for the emergence of the science of
organizational behavior.
● By the 1940s, doctoral degrees were awarded in OB and the first textbooks were
published, and by the late 1950s and early 1960s, OB was clearly a going concern.
● In the 1970s, active programs of research were going on—investigations into such
key processes as motivation and leadership, and the impact of organizational
structure.
● Development of scientific investigations into managerial and organizational issues
was uneven and unsystematic in the middle part of the twentieth century.
● In response to this state of affairs, the Ford Foundation sponsored a project in
which economists carefully analyzed the nature of business education in the United
States.
● They published their findings in 1959 in what became a very influential work known
as the Gordon and Howell report.
● This work recommended that the field of management pay greater attention to basic
academic disciplines, especially the social sciences.
 ● This advice had an enormous influence on business school curricula during the
1960s and promoted the development of the field of organizational behavior.

OB in Today’s Infotech Age

● Today, in what has been called the infotech age, computer technology has made it
possible to eliminate vast amounts of grunt work that laborers used to have to
perform.
● Much boring, monotonous, and dangerous physical labor has been eliminated by
computer technology, and this has changed the way people work.
● Easy access to information in online databases has made it possible for almost any
worker to gather the facts needed to make his or her own decisions.
● Today, people are likely to care at least as much about the work they do as the
money they make.
● In short, contemporary OB recognizes that people care more than ever about the
interpersonal side of work—recognition, relationships, and social interaction.
Subunit 2: Systems and Recent Trends

● To appreciate the nature of OB as a contemporary field, it is important to recognize

its connection to the various economic, social, and cultural trends and forces that
shape today’s society.
● Specifically, these include three prominent trends:
(1) the rise of global businesses with culturally diverse workforces,
(2) rapid advances in technology, and
(3) the rising expectations of people in general.

Globalization
● Today’s organizations operate within an economic system that is truly international in
scope.
● The nations of the world are not isolated from one another economically; what
happens in one country has effects on other countries.
○ Example: As an illustration, consider that when a massive earthquake
devastated the Caribbean island nation of Haiti in January 2010, its
economic effects (although small because of the country’s poor economic
base) were felt beyond its borders.
○ Like the loss of Haiti’s textile and apparel businesses have been felt by
suppliers and customers throughout the world who counted on Haitian goods
to sustain their own businesses.
● This tendency for the world’s countries to be influenced by one another is known as
globalization—the process of interconnecting the world’s people with respect to the
cultural, economic, political, technological, and environmental aspects of their lives.

● The trend toward globalization, widespread in recent years, has been driven by three
major forces.
○ First, technology has been involved in several ways. Technology has
drastically lowered the cost of transportation and communication, thereby
enhancing opportunities for international commerce.
○ Second, laws restricting trade generally have become liberalized throughout
the world (e.g., in the United States and other heavily industrialized countries,
free trade policies have been advocated).
○ Third, developing nations have sought to expand their economies by
promoting exports and opening their doors to foreign companies seeking
investments.

● If international trade is the major driver of globalization, then the primary vehicles
are multinational enterprises (MNEs)—organizations that have significant
operations (typically 25 percent or more of their output capacity) spread throughout
various nations but are headquartered in a single nation.
○ As of 2009, the top five largest MNEs in the world were Royal Dutch Shell,
Exxon Mobil, Wal-Mart Stores, British Petroleum (BP), and Chevron.

● The companies that sell oil and gasoline to fuel our cars dominate this list.
● As economies grow in various countries, MNEs establish offices there to capitalize
on the boom, resulting in an increase in the number of expatriates or expats, people
who live and work in a country other than their own.
○ However, shrinking economies sometimes leave expats without jobs in their
newly adopted nations.
● While working abroad, people are exposed to different cultures—the set of values,
customs, and beliefs that people have in common with other members of a social unit
(e.g., a nation).
● When people are faced with new cultures, it is not unusual for them to become
confused and disoriented—a phenomenon known as culture shock.
● People also experience culture shock when they return to their native cultures after
spending time away from it—a process of readjustment known as repatriation.
● Scientists have observed that the process of adjusting to a foreign culture generally
follows a U-shaped curve.
○ At first, people are optimistic and excited about learning a new culture. This
usually lasts about a month or so.
○ Then, for the next several months, they become frustrated and confused as
they struggle to learn their new cultures (i.e., culture shock occurs).
○ Finally, after about six months, people adjust to their new cultures and
become more accepting of them and satisfied with them.

● In general, culture shock results from the tendency for people to be highly parochial
in their assumptions about others, taking a narrow view of the world by believing that
there is one best way of doing things.
● They also tend to be highly ethnocentric, believing that their way of doing things is
the best way.
○ For example, Americans tend to be highly parochial by speaking only English
(whereas most Europeans speak several languages), and ethnocentric by
believing that everyone else in the world should learn their language.
● Because the world’s economy is global in nature, highly parochial and ethnocentric
views have no place in contemporary organizations.

Convergence and Divergence hypothesis

● During the 1950s and the 1960s, management scholars tended to overlook cultural
differences in organizations resulting in the convergence hypothesis which is a
biased approach to the study of management, assuming that principles of good
management are universal, and that ones that work well in the United States
will apply equally well in other nations.
● The alternative approach that emerged is the divergence hypothesis, which
recognizes that knowing how to manage most effectively requires a clear
understanding of the culture in which people work.
● Thus, today’s organizational scholars are becoming increasingly sensitive to
the ways in which culture influences organizational behavior.
Trend towards Diversity
● Widespread cultural differences also may be found within organizations.
○ Example: the prevalence of women in the workforce, and the growing
diversity of people from different races and ethnic groups, cannot be missed.
○ A broad range of people from both sexes as well as different races, ethnic
groups, and nationalities can be found throughout U.S. organizations.

● MORE WOMEN IN THE WORKFORCE: Women now comprise half of the workforce, a
figure that has risen steadily over the years.
○ This trend stems not only from economic necessity but also from the growing
social acceptance of women working outside the home.
○ As women, who traditionally have worked inside the home, have moved to
working outside the home, companies have found it beneficial—or even
necessary, in some cases—to make accommodations that help make this
possible.

● RACIAL AND ETHNIC DIVERSITY: Just as growing numbers of women have made men
less of a majority, so too has an influx of people from different racial and ethnic
groups and differences in birth rates made the existing workforce prototypes a
minority, like the white population.
○ The trend toward demographic diversity is in full swing today.
○ In fact, so-called “minority” group members, as a whole, currently outnumber
traditional majority group members in two U.S. states, California and New
Mexico.
○ As these trends suggest, the meaning of the term minority is changing rapidly
and is well on the way to becoming obsolete.

● PEOPLE ARE LIVING—AND WORKING—LONGER THAN EVER BEFORE: The generation of

children born in the economic boom period following World War II is called the baby
boom generation.
● Today, this large wave of individuals is approaching retirement age. But, because
retirement is no longer automatic at age 65, aged baby boomers will comprise a
growing part of the population in the next few years.
● Two things occur as a result of this trend.
○ First, older people in the workforce put more of a drain on the health-care
system.
■ As healthy as they may be thanks to modern medicine, it’s a simple
truth that older bodies eventually wear out and require medical
attention.
○ Second—and the other side of the coin—because older people are more
experienced on the job, they offer skills that only time alone can provide.
■ In fact, as such individuals retire, it is not unusual for them to leave
gaps in the workplace that are difficult to fill.
■ In many organizations, this creates serious problems.
● For this reason, many companies are instituting programs designed to help keep
older employees working a little longer before ceasing employment completely.
● Among these are the following:
○ Phased-retirement.
 ○ Deferred retirement option plan (DROP)
○
IMPLICATIONS FOR OB
● Differences in age, gender, and ethnic group membership are likely to bring with
them differences in communication style that must be addressed for organizations to
function effectively.
● Also is the case that people at different stages of their lives are likely to be motivated
by different things and to be satisfied with different aspects of their jobs.
● And, as workers adjust to a wider variety of people in the workplace, issues about
their norms and values are likely to come up, as well as their willingness to accept
others who are different from themselves.
● This can have important implications for potential stress and conflict in the workplace
and their career choices which may be expected to influence their capacity to work
effectively as members of the same work teams.

Advances in Technology

● Today in the 21st century, the essential nature of jobs and organizations as we have
known them has changed and continues to change all the time.
● Experts agree that a major catalyst is rapidly advancing computer technology,
especially the use of the Internet and wireless technology.
● After all, as more work is shifted to digital brains, some work that once was
performed by human brains becomes obsolete.
● At the same time, new opportunities arise as people scurry to find their footing amid
the shifting terrain of the high-tech revolution.

Downsizing and Outsourcing

● The term informate describes the process by which workers use computer
information technology to transform a once-physical task into one that involves
manipulating a sequence of digital commands.
● With this, many jobs are disappearing, leaving organizations (at least the most
successful ones!) smaller than before. Indeed, organizations have been rapidly
reducing the number of employees needed to operate effectively—a process known
as downsizing.
● Typically, this involves more than just laying off people in a move to save money.
● It is directed at adjusting the number of employees needed to work in newly designed
organizations, and is therefore also known as rightsizing.
● Another way organizations are restructuring is by completely eliminating those parts
of themselves that focus on non-core sectors of the business (i.e., tasks that are
peripheral to the organization) and hiring outside firms to perform these functions
instead—a practice known as outsourcing.
○ By outsourcing secondary activities, an organization can focus on what it
does best, its key capability—what is known as its core competency.

Virtual Organization
if you put together several organizations whose competencies complement each other and
have them work together on a special project, you’d have a very strong group of
collaborators.
This is the idea behind an organizational arrangement that is growing in popularity—the
virtual organization.
A virtual organization is a highly flexible, temporary organization formed by a group of
companies that join forces to exploit a specific opportunity.
For example, various companies often come together to work on special projects in
the entertainment industry.

Telecommuting
● In recent years, the practice of telecommuting (also known as teleworking) has been
growing in popularity.
○ This is the practice of using communications technology to enable work to
be performed from remote locations, such as the home or anyplace with e-
mail access.
● Although telecommuting was somewhat experimental at the end of the twentieth
century, it’s in full swing today.
● Both employees and employers enjoy the benefits of telecommuting.
○ For example, telecommuting makes it possible for employees to avoid the
hassle and expenses of daily commuting, which, in an era of congested roads
and expensive fuel costs, can be dramatic.
■ Employees working at home also enjoy saving money that they
would have spent purchasing work clothing and buying meals in
restaurants and from vending machines.
■ In fact, it has been estimated that each teleworker saves tens of
thousands of dollars per year, taking into account all expenses.
■ They also enjoy the flexibility it gives them to balance work and family
matters.
■ Also makes it possible for companies to save millions of dollars in
expenses for office facilities.
● Despite these benefits, as you might imagine, telecommuting is not for everyone; it
also has its limitations.
○ It works best on jobs that require concentration, have well-defined
beginning and end points, are easily portable, call for minimal amounts
of special equipment, and can be done with little supervision.
People’s Changing Expectations

Employee Engagement:
● In the field of OB, engagement refers to a mutual commitment between employers
and employees to do things to help one another achieve goals and aspirations. Thus,
engagement is a two-way process.
● Typically, it works like this: Organizations take steps to engage their employees, and
employees, in turn, respond by engaging their organizations.
● This takes several forms, such as the following:
- High levels of pride in the organization
- Pride in the organizations’ products and services
- Belief that the organization helps employees do their best
- Willingness to help others on the job
- Understanding “the big picture” and being willing to go beyond formal job
requirements when necessary.

● The four key drivers of engagement are as follows:

- Involving employees in making decisions
- Giving employees opportunities to express their ideas and opinions
- Providing opportunities for employees to develop their jobs
- Showing concern for employees’ well-being as individuals

● People who are not engaged or who are actively disengaged do not enjoy their work
experiences.
● At the same time, such individuals are not helping—and actively are hurting—their
organizations.
● Following the good management practices revealed by the field of organizational
behavior is the key to promoting not only engagement, but a wealth of other
beneficial outcomes both for organizations and the people who work in them.

Responding to Needs of Employees

● The diversity of lifestyles demands a diversity of working arrangements.
Some organizations have proven to be so flexible that they even
accommodate employees taking care of their dogs.
● Several practices have gained in popularity in recent years that provide the
flexibility today’s workers need.

● THE COMPRESSED WORKWEEK: The eight-hour/five-day workweek has

been the traditional standard for many years.
○ However, as employees have demanded more scheduling flexibility so
as to have more personal time, companies have experimented with
the compressed workweek, in which the time spent in a workweek is
divided into fewer days.
Four-day workweek. Employees work 10 hours per day for four
consecutive days, Monday through Thursday.
The company is closed from Friday through Sunday.
This gives employees three days off each week.
 Three-day workweek. Two groups of employees are formed, each of
which works for three days of 13 hours and 20 minutes per day.
One group works Monday through Wednesday, the other
works Thursday through Saturday.
The company is closed on Sunday.
This gives employees four days off each week.
5/4-9 compressed plan. Two groups of employees are formed.
One works four 9-hour days plus one 8-hour day the first
week. In week two, employees work four 9-hour days only.
This order is reversed for the second group.
The company is closed Saturday and Sunday.
This arrangement gives employees two days off one week and
three days off the next.
● Such arrangements would not work in situations in which work must be
performed only at certain times of day, such as when customers and
suppliers are available to be contacted.

● FLEXIBLE HOURS: contemporary organizations have put programs into

place that allow for flexibility.
○ One popular way of doing this is by implementing what are known as
flextime programs—policies that give employees some discretion
over when they can arrive at and leave work, thereby making it easier
to adapt their work schedules to the demands of their personal lives.
○ Typically, flextime programs require employees to work a common
core of hours, such as 9:00 A.M. to 12 noon and 1:00 P.M. to 3:00
P.M. Scheduling of the remaining hours, within certain spans is then
left up to the employees.
○ Generally, such programs have been well received and have been
linked to improvements in performance and job satisfaction, as well as
drops in employee turnover and absenteeism.

● THE CONTINGENT WORKFORCE: “PERMANENT TEMPORARY”

EMPLOYEES
○ Many organizations are eliminating permanent jobs and hiring people
to perform them whenever required.
○ Such individuals comprise what has been referred to as the
contingent workforce—people hired by organizations temporarily, to
work as needed for finite periods of time.
■ This practice serves not only the needs of companies whose
needs for employees grow and shrink over time and cannot
afford to have full-time employees, but also individuals who are
interested in working only occasionally.
○ The contingent workforce includes not only the traditional part-time
employees, such as department store Santas, but also freelancers,
on-call workers and workers provided by temporary help agencies.
○ Contingent employees generally do not receive such valuable fringe
benefits as health insurance and contributions to retirement.
■ Salaries take a hit too.
 ■ People who work half time, for example, typically earn less
than half of those who work full time.
○ For companies, the lack of continuity and the time new employees
spend “learning the ropes” only to leave shortly thereafter can put
serious dents in efficiency.

● IDIOSYNCRATIC WORK ARRANGEMENTS: with increasing frequency, the

arrangements between today’s employers and employees are being
negotiated to satisfy the unique interests of each.
○ Such arrangements are known as idiosyncratic work arrangements,
or more simply, i-deals.
○ These are uniquely customized agreements negotiated between
individual employees and their employers with respect to employment
terms benefiting each party. I-deals may take two forms.
■ Ex ante i-deals are negotiated before one begins a job, such
as while negotiating the terms of employment (e.g., salary,
fringe benefits, etc.).
■ Ex post i-deals are arrangements about employment terms
made once a person already is working in an organization.
○ The deals are not only idiosyncratic in nature, but also reflect the fact
that these arrangements are intended to be ideal for both employers
and employees alike.
● JOB SHARING: Sometimes, two or more employees assume the duties of a
single job, splitting its responsibilities, salary, and some benefits in proportion
to the time worked, a practice known as job sharing.
○ Such arrangements are rapidly growing in popularity as people enjoy
the kind of work that full-time jobs allow, but require the flexibility of
part-time work.
○ It can be effective in retaining employees who are looking for flexibility
in their working hours and in attracting new employees for whom this
is important.
○ Job sharing does not lend itself to all types of jobs.
■ Unless two people can handle the job as effectively as one,
without any problems in coordination, the practice should be
avoided.
■ Because people sharing jobs may not be counted as full-time
employees, important fringe benefits (e.g., eligibility for
health insurance) might not be available to them.
● VOLUNTARY REDUCED WORK TIME (V-TIME) PROGRAMS: Programs
known as voluntary reduced work time (V-time) programs allow employees
to reduce the amount of time they work by a certain amount (typically 10 or 20
percent), with a proportional reduction in pay.
○ Over the past few years, these programs have become very popular.
○ For example, various employees of the New York State government
have enjoyed having professional careers, but with hours that make it
possible for them to also meet their family obligations.
○ Not only does the state benefit from the money saved, but the
employees also enjoy the extra time they gain for non-work pursuits.
Subunit 3: Challenges and Approaches for OB

Responding to Economic Pressures

● During difficult economic times, effective management is often at a premium.
Anybody can run a company when business is booming, because the difference
between good and bad management reflects the difference between making a lot of
money and making a lot more money.
● When times are bad, though, managers are on the front lines with employees who
must be fired, who are asked to make do with less, and who worry about their
futures.
● The difference between good and bad management can be the difference between
profit and loss or, ultimately, between survival and failure.
● But the OB approaches sometimes differ.
○ In good times, understanding how to reward, satisfy, and retain employees is
at a premium.
○ In bad times, issues like stress, decision making, and coping come to the fore

Responding to Globalization
● The world has become a global village. In the process, the manager’s job has
changed.
● Increased Foreign Assignments: A manager now has to manage working and
taking care of foreign investments, which was not the case earlier.
● Working with People from Different Cultures: Managers at global companies such
as McDonald’s, Disney, and Coca-Cola have come to realize that economic values
are not universally transferable.
○ Management practices need to be modified to reflect the values of the
different countries in which an organization operates.
● Overseeing Movement of Jobs to Countries with Low-Cost Labor: In a global
economy, jobs tend to flow where lower costs give businesses a comparative
advantage, though labor groups, politicians, and local community leaders see the
exporting of jobs as undermining the job market at home.
Managers face the difficult task of balancing the interests of their organization with
their responsibilities to the communities in which they operate.

Managing Workforce Diversity

● Workforce diversity acknowledges a workforce of women and men; many racial and
ethnic groups; individuals with a variety of physical or psychological abilities; and
people who differ in age and sexual orientation.
● Managing this diversity is a global concern.
○ The most significant change in the U.S. labor force during the last half of the
twentieth century was the rapid increase in the number of female workers.
○ In 1950, for instance, only 29.6 percent of the workforce was female.
○ By 2008, it was 46.5 percent. The first half of the twenty-first century will be
notable for changes in racial and ethnic composition and an aging baby boom
generation.
○ Workforce diversity presents great opportunities and poses challenging
questions for managers and employees in all countries
Improving Customer Service
● Today, the majority of employees in developed countries work in service jobs,
including 80 percent in the United States.
○ In Australia, 73 percent work in service industries.
○ In the United Kingdom, Germany, and Japan, the percentages are 69, 68,
and 65, respectively.
● Service jobs include technical support representatives, fast-food counter
workers, sales clerks, waiters and waitresses, nurses, automobile repair
technicians, consultants, credit representatives, financial planners, and flight
attendants.
● The common characteristic of these jobs is substantial interaction with an
organization’s customers.
● And because an organization can’t exist without customers, management needs to
ensure employees do what it takes to please customers.
● Many organizations have failed because their employees failed to please customers.
Management needs to create a customer-responsive culture.
○ OB can provide considerable guidance in helping managers create such
cultures—in which employees are friendly and courteous, accessible,
knowledgeable, prompt in responding to customer needs, and willing to do
what’s necessary to please the customer.

Stimulating Innovation and Change

● Today’s successful organizations must foster innovation and master the art of
change, or they’ll become candidates for extinction.
● Victory will go to the organizations that maintain their flexibility, continually improve
their quality, and beat their competition to the marketplace with a constant stream of
innovative products and services.
○ Example: Amazon.com is putting a lot of independent bookstores out of
business as it proves you can successfully sell books (and most anything
else) from a Web site.
● The challenge for managers is to stimulate their employees’ creativity and
tolerance for change.
● The field of OB provides a wealth of ideas and techniques to aid in realizing these
goals.

Coping with “Temporariness”

● Most managers and employees today work in a climate best characterized as
“temporary”.
● Workers must continually update their knowledge and skills to perform new job
requirements.
● Today’s managers and employees must learn to cope with temporariness, flexibility,
spontaneity, and unpredictability.
● The study of OB can help us better understand a work world of continual change,
overcome resistance to change, and create an organizational culture that thrives on
change.

Working in Networked Organizations

● The manager’s job is different in a networked organization.
 ● Motivating and leading people and making collaborative decisions online requires
different techniques than when individuals are physically present in a single location.
● As more employees do their jobs by linking to others through networks, managers
must develop new skills.
● OB can provide valuable insights to help with honing those skills.

Helping Employees Balance Work–Life Conflicts

● Today, employees are increasingly complaining that the line between work and
nonwork time has become blurred, creating personal conflicts and stress.
○ First, the creation of global organizations means the world never sleeps.
○ Second, communication technology allows many technical and
professional employees to do their work at home, in their cars, or on the
beach in Tahiti—but it also means many feel like they never really get away
from the office.
○ Third, organizations are asking employees to put in longer hours.
○ Finally, the rise of the dual-career couple makes it difficult for married
employees to find time to fulfill commitments to home, spouse, children,
parents, and friends.
■ Employees increasingly recognize that work infringes on their
personal lives, and they’re not happy about it.
● Recent studies suggest employees want jobs that give them flexibility in their work
schedules so they can better manage work–life conflicts.
● Organizations that don’t help their people achieve work–life balance will find it
increasingly difficult to attract and retain the most capable and motivated employees.

Creating a Positive Work Environment

● A real growth area in OB research is positive organizational scholarship (also
called positive organizational behavior ), which studies how organizations develop
human strengths, foster vitality and resilience, and unlock potential.
● Some key independent variables in positive OB research are engagement, hope,
optimism, and resilience in the face of strain.
● Positive organizational scholars have studied a concept called “reflected best-
self”—asking employees to think about when they were at their “personal best” in
order to understand how to exploit their strengths.

Improving Ethical Behavior

● Employees see people all around them engaging in unethical practices—elected

officials pad expense accounts or take bribes; When caught, these people give
excuses such as “Everyone does it” or “You have to seize every advantage
nowadays.”
● Managers and their organizations are responding to the problem of unethical
behavior in a number of ways.
○ They’re writing and distributing codes of ethics to guide employees
through ethical dilemmas.
○ They’re offering seminars, workshops, and other training programs to try
to improve ethical behaviors.
 ○ They’re providing in-house advisors who can be contacted, in many cases
anonymously, for assistance in dealing with ethical issues, and they’re
creating protection mechanisms for employees who reveal internal unethical
practices.
● Today’s manager must create an ethically healthy climate for his or her employees,
where they can do their work productively with minimal ambiguity about what right
and wrong behaviors are.
● Companies that promote a strong ethical mission, encourage employees to
behave with integrity, and provide strong ethical leadership can influence
employee decisions to behave ethically.

GIVE CONCLUSION
Unit 2: Motivation and Job Satisfaction
Subunit 1: Nature, early theories of work motivation (Maslow and Herzberg)

● Motivation is one of the most frequently researched topics in OB.

● Technically, the term motivation can be traced to the Latin word movere, which
means “to move.”
● Motivation is a complex psychological process that drives individuals to take action
towards achieving their goals.
○ It involves the arousal, direction, and persistence of behavior towards a
particular goal or outcome.
○ It starts with a physiological or psychological deficiency or need that activates
a behavior or a drive that is aimed at a goal or incentive. Thus, the key to
understanding the process of motivation lies in the meaning of, and
relationships among, needs, drives, and incentives.
○ In the context of Organizational Behavior, these can translate into Intensity,
Direction and Persistence in employees.
■ Intensity describes how hard a person tries.
■ However, high intensity is unlikely to lead to favorable job-
performance outcomes unless the effort is channeled in a direction
that benefits the organization.
■ Persistence measures how long a person can maintain effort.
Motivated individuals stay with a task long enough to achieve their
goal.
TYPES OF MOTIVES
● Primary Motives: some motives are unlearned and physiologically based.
○ Such motives are variously called physiological, biological, unlearned, or
primary.
○ The most commonly recognized primary motives include hunger, thirst, sleep,
avoidance of pain, sex, and maternal concern.
● Secondary Motives:
○ Most important to the study of organizational behavior
○ A motive must be learned in order to be included in the secondary
classification.
○ Some of the more important ones are power, achievement, and affiliation, or,
as they are commonly referred to, n Pow, n Ach, and n Aff.
○ In addition, especially in reference to organizational behavior, security and
status are important secondary motives.
● Intrinsic and Extrinsic motivation
○ Motivation can be intrinsic or extrinsic and plays a crucial role in
organizational behavior by influencing employee engagement and
productivity.
○ Intrinsic motivation is driven by personal interest, enjoyment, or satisfaction
derived from the activity itself. In other words, individuals engage in an activity
because they find it inherently rewarding or fulfilling.
■ Examples of intrinsic motivators include a sense of accomplishment,
personal growth, and the enjoyment of learning.
 ○ Extrinsic motivation, on the other hand, is driven by external factors such as
money, recognition, or social status. Individuals engage in an activity because
they expect to receive some form of external reward or avoid punishment.
■ Examples of extrinsic motivators include salary increases,
promotions, and bonuses.
○ It's worth noting that intrinsic and extrinsic motivation are not mutually
exclusive and can coexist in different degrees depending on the individual
and the situation.
■ For example, an individual may be intrinsically motivated to learn a
new skill but also motivated by the prospect of receiving a promotion
or salary increase as a result.
○ Motivation can vary in intensity and can be affected by factors such as stress,
fatigue, and mood.

Early theories of work motivation:

● Work motivation refers to the set of psychological processes that drive individuals to
engage in work-related behaviors and activities. This can include behaviors such as
○ showing up to work on time,
○ completing tasks efficiently and effectively, and
○ going above and beyond what is required.
● Work motivation can be influenced by a variety of factors, including
○ job characteristics (such as autonomy, feedback, and task variety),
○ individual differences (such as personality traits and values), and
○ organizational culture (such as leadership style and reward systems).

● Maslow’s Hierarchy of Needs: An Important Historical Contribution

○ Abraham Maslow, in a classic paper, outlined the elements of an overall
theory of motivation.
○ He thought that a person’s motivational needs could be arranged in a
hierarchical manner.
○ In essence, he believed that once a given level of need is satisfied, it no
longer serves to motivate.
○ The next higher level of need has to be activated in order to motivate the
individual.
○ Maslow identified five levels in his need hierarchy:
■ Physiological needs.
● most basic level in the hierarchy,
● corresponds to the unlearned primary needs
● the needs of hunger, thirst, sleep, and sex are some examples.
● according to the theory, once these basic needs are satisfied,
they no longer motivate.
● For example, a starving person will strive to obtain a carrot
that is within reach. However, after eating his or her fill of
carrots, the person will not strive to obtain another one and will
be motivated only by the next higher level of needs.
 ■ Safety needs.
● roughly equivalent to the security need.
● Maslow stressed emotional as well as physical safety.
● The whole organism may become a safety-seeking
mechanism.
● Yet, as is true of the physiological needs, once these safety
needs are satisfied, they no longer motivate.
■ Love needs.
● loosely corresponds to the affection and affiliation needs.
● Like Freud, Maslow seems guilty of poor choice of wording to
identify his levels.
● His use of the word love has many misleading connotations,
such as sex, which is actually a physiological need.
● Perhaps a more appropriate word describing this level would
be belongingness or social needs.
■ Esteem needs.
● represents the higher needs of humans.
● the needs for power, achievement, and status can be
considered part of this level.
● Maslow carefully pointed out that the esteem level contains
both self-esteem and esteem from others.
■ Needs for self-actualization.
● Maslow’s major contribution, he portrays this level as the
culmination of all the lower, intermediate, and higher needs of
humans.
● People who have become self-actualized are self-fulfilled and
have realized all their potential.
● Self-actualization is the person’s motivation to transform
perception of self into reality.
● Criticism of Maslow’s theory
○ While Maslow's Hierarchy of Needs theory has been influential in the field of
psychology and management, it has also faced criticisms from some scholars
and researchers. Here are some of the main criticisms of the theory:
○ Lack of empirical evidence:
■ lacks empirical support.
■ limited scientific evidence to support the claim that human needs are
organized into a hierarchical structure, or that people must fulfill lower-
level needs before moving to higher-level needs.

○ Cultural bias:
■ reflects a Western, individualistic perspective that may not be
applicable to all cultures.
■ For example, some cultures prioritize collective needs over individual
needs, or may have different ideas about what constitutes self-
actualization.

○ Oversimplification:
 ■ overly simplistic and doesn't fully capture the complexity of human
motivation.
■ Human motivation is influenced by many factors beyond basic needs,
such as personal goals, emotions, and social context.

○ Ambiguity of needs:
■ Maslow's categories of needs are too broad and ambiguous, making it
difficult to operationalize or measure them accurately.

○ Lack of differentiation:
■ fails to differentiate between needs and motives.
■ treats them as interchangeable.

● Herzberg’s Two-Factor Theory of Motivation

○ Frederick Herzberg many years ago conducted a widely reported
motivational study on about 200 accountants and engineers employed by
firms in and around Pittsburgh, Pennsylvania.
○ He used the critical incident method of obtaining data for analysis.
○ The professional subjects in the study were essentially asked two questions:
(1) When did you feel particularly good about your job—what turned you on;
and
(2) When did you feel exceptionally bad about your job—what turned you off?
○ Herzberg concluded that job satisfiers are related to job content and that job
dissatisfiers are allied to job context.
○ Herzberg labeled the satisfiers motivators, and he called the dissatisfiers
hygiene factors.
○ The hygiene factors are preventive and environmental in nature and roughly
equivalent to Maslow’s lower level needs.
■ These hygiene factors prevent dissatisfaction, but they do not lead to
satisfaction.
○ Only the motivators, Herzberg asserted, motivate employees on the job. They
are roughly equivalent to Maslow’s higher-level needs.
■ They bring job satisfaction but their absence does not necessarily lead
to job dissatisfaction.
○ Thus, according to Herzberg’s theory, only a challenging job that has the
opportunities for achievement, recognition, responsibility, advancement, and
growth will motivate personnel.
● Criticism of herzberg’s theory
○ from an academic perspective, Herzberg’s theory oversimplifies the
complexities of work motivation.
Subunit 2: Contemporary theories (ERG and McClelland)

McClelland’s Theory of Needs

● A theory developed by David McClelland and his associates, which states that
achievement, power, and affiliation are three important needs that help explain
motivation.
○ Need for achievement (nAch) is the drive to excel, to achieve in relationship
to a set of standards, and to strive to succeed.
○ Need for power (nPow) is the need to make others behave in a way they
would not have otherwise.
○ Need for affiliation (nAff) is the desire for friendly and close interpersonal
relationships.
● McClelland and subsequent researchers focused most of their attention on nAch.
● High achievers perform best when they perceive their probability of success as
0.5—that is, a 50–50 chance.
● They dislike gambling with high odds because they get no achievement satisfaction
from success that comes by pure chance.
● Similarly, they dislike low odds (high probability of success) because then there is no
challenge to their skills.
● They like to set goals that require stretching themselves a little.
● Relying on an extensive amount of research, we can predict some relationships
between achievement need and job performance.
○ First, when jobs have a high degree of personal responsibility and feedback
and an intermediate degree of risk, high achievers are strongly motivated.
■ They are successful in entrepreneurial activities such as running their
own businesses, for example, and managing self-contained units
within large organizations.
○ Second, a high need to achieve does not necessarily make someone a good
manager, especially in large organizations.
■ People with a high achievement need are interested in how well they
do personally, and not in influencing others to do well.
■ HighnAch salespeople do not necessarily make good sales managers,
and the good general manager in a large organization does not
typically have a high need to achieve.
○ Third, needs for affiliation and power tend to be closely related to managerial
success.
■ The best managers are high in their need for power and low in their
need for affiliation.
■ In fact, a high power motive may be a requirement for managerial
effectiveness.
● Among the early theories of motivation, McClelland’s has had the best research
support.
● Unfortunately, it has less practical effect than the others.
○ Because McClelland argued that the three needs are subconscious—we may
rank high on them but not know it—measuring them is not easy.
○ In the most common approach, a trained expert presents pictures to
individuals, asks them to tell a story about each, and then scores their
responses in terms of the three needs.
 ○ However, the process is time consuming and expensive, and few
organizations have been willing to invest in measuring McClelland’s concept.

●
●
Subunit 3: Name and functions of Job Satisfaction
Unit 3: Organizational Structure and Leadership
Subunit 1: Nature and types of organizations (traditional and modern)

● An organization is a structured social system consisting of groups and individuals

working together to meet some agreed upon objectives.
○ In simple words, it consists of individuals working alone and together in work
groups and striving to achieve common goals.
● To accomplish each goal, certain tasks have to be performed by these individuals,
either alone or as teams.
● An organizational structure defines how job tasks are formally divided, grouped,
and coordinated.
● Managers need to address six key elements when they design their organization’s
structure:
○ work specialization (To what degree are activities subdivided into separate jobs?)

○ Departmentalization (On what basis will jobs be grouped together?)

○ Chain of command (To whom do individuals and groups report?)

○ Span of control (How many individuals can a manager efficiently and effectively direct?)

○ Centralization/decentralization (Where does decision-making and authority lie?)

○ Formalization (To what degree will there be rules and regulations to direct employees and
managers?)

Work Specialization
● Example: Early in the twentieth century, Henry Ford became rich by building
automobiles on an assembly line.
○ Every Ford worker was assigned a specific, repetitive task such as putting on
the right-front wheel or installing the right-front door.
○ By dividing jobs into small standardized tasks that could be performed over
and over, Ford was able to produce a car every 10 seconds, using employees
who had relatively limited skills.
● This example demonstrated that work can be performed more efficiently if employees
are allowed to specialize.
● Work specialization, or division of labor describes the degree to which activities in
the organization are subdivided into separate jobs.
● The essence is to divide a job into a number of steps, each completed by a separate
individual.
● Thus individuals specialize in doing part of an activity rather than the entirety.
● By the late 1940s, most manufacturing jobs in industrialized countries featured high
work specialization.
● Management saw specialization as a means of making the most efficient use of its
employees’ skills and even successfully improving them through repetition.
● Advantages:
○ Less time spent in changing tasks, putting away tools and equipment from a
prior step, and getting ready for another.
 ○ Easier and less costly to find and train workers to do specific and repetitive
tasks, especially in highly sophisticated and complex operations.
○ Increases efficiency and productivity by encouraging the creation of special
inventions and machinery.
● Thus for much of the first half of the 20th century, managers viewed work
specialization as an unending source of increased productivity.
● Disadvantages:
● When specialization was not widely practiced, its introduction almost always
generated higher productivity.
● But by the 1960s, it increasingly seemed a good thing can be carried too far.
● Human diseconomies from specialization began to surface in the form of
○ boredom,
○ fatigue,
○ stress,
○ low productivity,
○ poor quality,
○ increased absenteeism, and
○ high turnover
● Overcoming challenges:
○ Managers could increase productivity now by enlarging, rather than
narrowing, the scope of job activities.
○ Giving employees a variety of activities to do, allowing them to do a
whole and complete job, and putting them into teams with
interchangeable skills often achieved significantly higher output, with
increased employee satisfaction.
● Emerging trends:
○ High work specialization helps McDonald’s make and sell hamburgers and
fries efficiently and aids medical specialists in most health maintenance
organizations.
○ Amazon’s Mechanical Turk program, TopCoder, and others like it have
facilitated a new trend in microspecialization in which extremely small
pieces of programming, data processing, or evaluation tasks are delegated to
a global network of individuals by a program manager who then assembles
the results.
■ For example, a manager who has a complex but routine computer
program to write might send a request for specific subcomponents of
the code to be written and tested by dozens of subcontracted
individuals in the network (which spans the entire globe), enabling the
project to be completed far more quickly than if a single programmer
were writing the parts.
● This emerging trend suggests there still may be advantages to be had in
specialization.

Departmentalization
● The basis by which jobs are grouped is called departmentalization.
● On the basis of functions: One of the most popular ways to group activities is by
functions performed.
 ○ Example: A hospital might have departments devoted to research, surgery,
intensive care, accounting, and so forth.
○ Advantage: efficiencies gained from putting like specialists together.

● On the basis of type of product or service

○ Example: Procter & Gamble places each major product—such as Tide,
Pampers, Charmin, and Pringles—under an executive who has complete
global responsibility for it.
○ Advantage: increased accountability for performance, because all activities
related to a specific product or service are under the direction of a single
manager.

● On the basis of geography, or territory

○ Example: sales function, for instance, may have western, southern,
midwestern, and eastern regions
○ Advantage: valuable when an organization’s customers are scattered over a
large geographic area and have similar needs based on their location.

● On the basis of Process

○ This departmentalization works for processing customers as well as products.
○ Example: In one typical state, applicants go through three steps when trying
to get their driving license, each handled by a separate department: (1)
validation by motor vehicles division, (2) processing by the licensing
department, and (3) payment collection by the treasury department.

● Final category of departmentalization uses the particular type of customer the

organization seeks to reach.
○ Example: Microsoft is organized around four customer markets:
consumers, large corporations, software developers, and small businesses.
○ Advantage: Customers in each department have a common set of problems
and needs best met by having specialists for each.

Chain of Command
● The chain of command is an unbroken line of authority that extends from the top of
the organization to the lowest echelon and clarifies who reports to whom.
● Can’t discuss the chain of command without also discussing authority and unity of
command.
○ Authority refers to the rights inherent in a managerial position to give orders
and expect them to be obeyed.
○ The principle of unity of command helps preserve the concept of an
unbroken line of authority.
■ It says a person should have one and only one superior to whom he or
she is directly responsible.
■ If the unity of command is broken, an employee might have to cope
with conflicting demands or priorities from several superiors.
● Current times:
○ A low level employee today can access information in seconds that was
available only to top managers a generation ago.
 ○ Operating employees are empowered to make decisions previously reserved
for management.
○ Self-managed and cross-functional teams and the creation of new structural
designs that include multiple bosses show why authority and unity of
command hold less relevance today.
● Many organizations still find they can be most productive by enforcing the chain of
command.
○ Indeed, one survey of more than 1,000 managers found that 59 percent of
them agreed with the statement, “There is an imaginary line in my company’s
organizational chart. Strategy is created by people above this line, while
strategy is executed by people below the line.”

Span of Control
● Question of span of control is important because it largely determines the number of
levels and managers an organization has.
● All things being equal, the wider or larger the span, the more efficient the
organization.
● Wider spans are more efficient in terms of cost.
○ However, at some point when supervisors no longer have time to provide the
necessary leadership and support, they reduce effectiveness and employee
performance suffers.
● Narrow or small spans have their advocates.
○ By keeping the span of control to five or six employees, a manager can
maintain close control.
○ But narrow spans have three major drawbacks.
■ First, they’re expensive because they add levels of management.
■ Second, they make vertical communication in the organization more
complex.
● The added levels of hierarchy slow down decision making and
tend to isolate upper management.
■ Third, narrow spans encourage overly tight supervision and
discourage employee autonomy.
● The trend in recent years has been toward wider spans of control.
○ They’re consistent with firms’ efforts to reduce costs, cut overhead, speed
decision making, increase flexibility, get closer to customers, and
empower employees.
○ However, to ensure performance doesn’t suffer because of these wider
spans, organizations have been investing heavily in employee training.

Centralization and Decentralization

● Centralization refers to the degree to which decision making is concentrated at a
single point in the organization.
● In centralized organizations, top managers make all the decisions, and lower-level
managers merely carry out their directives.
○ The concept of centralization includes only formal authority—that is, the rights
inherent in a position.
● In decentralization, decision making is pushed down to the managers closest to the
action.
 ○ Can act more quickly to solve problems, more people provide input into
decisions, and employees are less likely to feel alienated from those who
make decisions that affect their work lives.

● Management efforts to make organizations more flexible and responsive have

produced a recent trend toward decentralized decision making by lower level
managers, who are closer to the action and typically have more detailed knowledge
about problems than top managers.
○ Example: Sears and JC Penney have given their store managers
considerably more discretion in choosing what merchandise to stock.

Formalization
● The degree to which jobs within the organization are standardized.
● If a job is highly formalized, the incumbent has a minimal amount of discretion
over what to do and when and how to do it.
○ Employees can be expected always to handle the same input in exactly the
same way, resulting in a consistent and uniform output.
○ There are explicit job descriptions, lots of organizational rules, and clearly
defined procedures covering work processes in organizations in which there
is high formalization.
● Where formalization is low, job behaviors are relatively unprogrammed, and
employees have a great deal of freedom to exercise discretion in their work.
● Standardization not only eliminates the possibility of employees engaging in
alternative behaviors, but it even removes the need for employees to consider
alternatives.
● The degree of formalization can vary widely between and within organizations.

Types of Organizations
Subunit 3: Charismatic, Transformational and Visionary leadership

CHARISMATIC LEADERSHIP

● Max Weber, a sociologist, defined charisma (from the Greek for “gift”) more than a
century ago as “a certain quality of an individual personality, by virtue of which
he or she is set apart from ordinary people and treated as endowed with
supernatural, superhuman, or at least specifically exceptional powers or
qualities.”
○ Weber argued that charismatic leadership was one of several ideal types of
authority
● The first researcher to consider charismatic leadership in terms of OB was Robert
House.
○ According to House’s charismatic leadership theory, followers attribute
heroic or extraordinary leadership abilities when they observe certain
behaviors.
○ A number of studies have attempted to identify the characteristics of
charismatic leaders: they have a vision, they are willing to take personal risks
to achieve that vision, they are sensitive to follower needs, and they exhibit
extraordinary behaviors.
Born or Made?
● Individuals are born with traits that make them charismatic.
○ In fact, studies of identical twins have found they score similarly on
charismatic leadership measures, even if they were raised in different
households and had never met.
○ Personality is also related to charismatic leadership; charismatic leaders are
likely to be extraverted, self-confident, and achievement oriented.
○ Consider Narendra Modi and Ronald Reagan: like them or not, they are
often compared because both possess the qualities of charismatic leaders.
● Most experts believe individuals can be trained to exhibit charismatic behaviors.
○ One set of authors proposes a three-step process.
■ First, develop an aura of charisma by maintaining an optimistic view;
using passion as a catalyst for generating enthusiasm; and
communicating with the whole body, not just with words.
■ Second, draw others in by creating a bond that inspires them to
follow.
■ Third, bring out the potential in followers by tapping into their
emotions.

Influencing followers
● How do charismatic leaders actually influence followers?
● Evidence suggests a four-step process.
● It begins with articulating an appealing vision, a long-term strategy for attaining a
goal by linking the present with a better future for the organization.
○ Desirable visions fit the times and circumstances and reflect the uniqueness
of the organization.
○ Example: Steve Jobs championed the iPod at Apple, noting, “It’s as Apple as
anything Apple has ever done.”
 ○ People in the organization must also believe the vision is challenging yet
attainable.
● Second, a vision is incomplete without an accompanying vision statement, a formal
articulation of an organization’s vision or mission.
○ Charismatic leaders may use vision statements to imprint on followers an
overarching goal and purpose.
○ They build followers’ self-esteem and confidence with high performance
expectations and belief that followers can attain them.
● Next, through words and actions the leader conveys a new set of values and sets
an example for followers to imitate.
○ One study of Israeli bank employees showed charismatic leaders were
more effective because their employees personally identified with them.
○ Charismatic leaders also set a tone of cooperation and mutual support.
○ A study of 115 government employees found they had a stronger sense of
personal belonging at work when they had charismatic leaders, increasing
their willingness to engage in helping and compliance-oriented behavior.
● Finally, the charismatic leader engages in emotion-inducing and often
unconventional behavior to demonstrate courage and conviction about the vision.
● Followers “catch” the emotions their leader is conveying.

Charismatic leadership and Situational Factors

● Charisma appears most successful when the follower’s task has an ideological
component or the environment includes a high degree of stress and uncertainty.
○ Even in laboratory studies, when people are psychologically aroused, they
are more likely to respond to charismatic leaders.
○ This may explain why, when charismatic leaders surface, it’s likely to be in
politics or religion, or during wartime, or when a business is in its infancy or
facing a life-threatening crisis.
○ Example: Franklin D. Roosevelt offered a vision to get the United States out
of the Great Depression in the 1930s.
● People are especially receptive to charismatic leadership when they sense a crisis,
when they are under stress, or when they fear for their lives.
○ Charismatic leaders are able to reduce stress for their employees, perhaps
because they help make work seem more meaningful and interesting.
● And some peoples’ personalities are especially susceptible to charismatic leadership.
○ Example: Consider self-esteem. An individual who lacks self-esteem and
questions his or her self-worth is more likely to absorb a leader’s direction
rather than establish his or her own way of leading or thinking.

The Dark Side of Charismatic Leadership

● Unfortunately, charismatic leaders who are larger than life don’t necessarily act in the
best interests of their organizations.
○ Many have allowed their personal goals to override the goals of the
organization.
○ Example: The results at companies such as Enron, Tyco, WorldCom, and
HealthSouth were leaders who recklessly used organizational resources for
their personal benefit and executives who violated laws and ethical
 boundaries to inflate stock prices and allow leaders to cash in millions of
dollars in stock options.
● It’s little wonder research has shown that individuals who are narcissistic are also
higher in some behaviors associated with charismatic leadership.
● It’s not that charismatic leadership isn’t effective; overall, it is.
○ But a charismatic leader isn’t always the answer. Success depends, to some
extent, on the situation and on the leader’s vision.
○ Some charismatic leaders—Hitler, for example—are all too successful at
convincing their followers to pursue a vision that can be disastrous.

TRANSFORMATIONAL LEADERSHIP

● Transformational leaders inspire followers to transcend their self-interests for the

good of the organization and can have an extraordinary effect on their followers.
○ Example: Andrea Jung at Avon, Richard Branson of the Virgin Group, and
Jim McNerney of Boeing are all transformational leaders.
○ They pay attention to the concerns and needs of individual followers; they
change followers’ awareness of issues by helping them look at old problems
in new ways; and they excite and inspire followers to put out extra effort to
achieve group goals.
● Transformational leadership builds on transactional leadership and produces levels
of follower effort and performance beyond what transactional leadership alone can
do. But the reverse isn’t true.
○ So if you are a good transactional leader but do not have transformational
qualities, you’ll likely only be a mediocre leader.
○ The best leaders are transactional and transformational.
● Leadership Model-
● Only with these four styles—Individualized consideration, intellectual
stimulation, inspirational motivation, and idealized influence (all aspects of
transformational leadership)—are leaders able to motivate followers to perform
above expectations and transcend their self-interest for the sake of the organization.
○ All result in extra effort from workers, higher productivity, higher morale and
satisfaction, higher organizational effectiveness, lower turnover, lower
absenteeism, and greater organizational adaptability.
● Based on this model, leaders are generally most effective when they regularly use
each of the four transformational behaviors.

How Transformational Leadership Works

● more effective because more creative, but also because they encourage those who
follow them to be creative, too.
● greater decentralization of responsibility in organizations, managers have more
propensity to take risks, and compensation plans are geared toward long-term results
—all of which facilitate corporate entrepreneurship.
● also show greater agreement among top managers about the organization’s goals,
which yields superior organizational performance.
● Transformational leaders are able to increase follower self-efficacy, giving the group
a “can do” spirit.
 ● Followers are more likely to pursue ambitious goals, agree on the strategic goals of
the organization, and believe the goals they are pursuing are personally important.
● Finally, it engenders commitment on the part of followers and instills greater trust in
the leader.

Evaluation of Transformational Leadership

● Impressively supported at diverse job levels and occupations (school principals,
teachers, marine commanders, ministers, etc)
○ Study: One study of R&D firms found teams whose project leaders scored
high on transformational leadership produced better-quality products as
judged 1 year later and higher profits 5 years later.
○ Study: A review of 117 studies testing transformational leadership found it
was related to higher levels of individual follower performance, team
performance, and organizational performance.
● However, not equally effective in all situations.
○ It has a greater impact on the bottom line in smaller, privately held firms than
in more complex organizations.
● Individual-focused transformational leadership is behavior that empowers
individual followers to develop, enhance their abilities, and increase self-efficacy.
● Team-focused transformational leadership emphasizes group goals, shared
values and beliefs, and unified efforts.
○ Study: Evidence from a sample of 203 team members and 60 leaders in a
business unit found individual transformational leadership associated with
higher individual-level performance, whereas team-focused transformational
leadership drew higher group-level performance.
● Also, the four I’s in transformational leadership are not always superior in
effectiveness to transactional leadership (contingent reward leadership sometimes
works as well as transformational leadership).
○ In summary, transformational leadership is more strongly correlated than
transactional leadership with lower turnover rates, higher productivity, lower
employee stress and burnout, and higher employee satisfaction.
● Study: The GLOBE study—of 18,000 leaders from 825 organizations in 62 countries
— links a number of elements of transformational leadership with effective
leadership, regardless of country.
○ Vision, foresight, providing encouragement, trustworthiness, dynamism,
positiveness, and proactiveness top the list of universal elements found in
transformational leadership.

VISIONARY LEADERSHIP

○ According to Deren (2019), Vision is a concept that opens new horizons in

the leadership literature and is the basic component of leadership styles in all
leadership fields.
○ It is the ability to put goals into practice by imagining in order to achieve
goals.
○ To assume all responsibilities is to take action by assuming the
responsibilities of the risk contents without being in a dilemma.
 ○ Visionary Leadership is defined as an operation to influence others in order
to create a better future and solve problems in an innovative way.
○ Visionary leaders are those who have the ability to see the capabilities in
others and have the tendency to lead them.
○ They direct the company in a particularly intense and clear, preferably
illustrated form, and have a contagious effect that provokes participation
as soon as it is expressed.
○ This type of leadership style creates a positive momentum and endurance
in an organization.
○ Goleman (2001) talks about this style as having inspiring, long-term goals
that take the department and company forward, creating an atmosphere
where team members can build their knowledge and abilities, knowing they
have a mission that allows progress and development.
○ Short-term focus may be sacrificed for the greater good, but the journey is far-
reaching and deterministic.
○ Visionary leadership can be seen as one of the prerequisites for inspiration
with a humanistic touch to be developed in people as we progress with our
businesses.
● Most effective when an organization needs a new and clear direction to follow.
○ Employees or people who perform under visionary leaders always enjoy
working with them and truly want themselves to reach their full potential and
find meaning in their work.
● Visionary leaders are somewhere different from other leaders as they always
inspire, encourage, empower, and equip their team members for a better
outcome.
○ Therefore, if businesses are looking for moving to the next high level and take
on new initiatives or re-evaluate their vision, then a visionary leader is likely
the perfect person an organization should consider to be working with.

Qualities/Characteristics
● Persistent. They know it will be challenging to execute their vision. But this is what
drives their determination to succeed.
○ Visionary leaders know how to navigate challenges and push through them,
keeping the team on course by leading with a “never-give-up” attitude no
matter how tough things get.
● Inspirational and magnetic. For the visionary leader, success is a goal best shared.
○ They understand that one of the most effective ways to bring out the best in
their teams is to tap into their emotions and ignite their passions.
● Open-minded. Visionary leaders are natural pivoters and hold multiple perspectives.
They are able to keep the big picture in mind but remain flexible in how to get there.
○ They are adept at harnessing the power of resources and out-of-the-box
creative solutions to turn setbacks into success.
● Innovative and imaginative.Their imagination is what sets them apart, what got
them to where they are, and what drives company culture.
● Bold. They have the courage to take risks and the strength to endure uncertainty.
○ They would rather fail trying than not try at all.
○ Recognize the value of failure in that it can test a team’s resilience and ability
to move on and grow.
 ● Collaborative and communicative. They are inclusive, inviting others to be a part of
the vision.
○ They attract talent who are passionate and who are inspired by the big picture
to create their best work.
● Goal-oriented and resolute. Nothing deters their razor-sharp focus. And their
optimism serves as a firm anchor when faced with setbacks.
○ Rather than dwell on difficulties, they encourage teams to embrace them as
part of a journey to greatness.
● Well-organized. Visionary leaders mobilize teams or followers to work toward their
vision and they need structure and organization to guide them.
○ Strong organization skills keep communication flowing and the work on track.
● Responsible. Visionary leaders take chances and make sacrifices. But they also
take responsibility for their actions and their vision.
○ For instance, they are keenly aware that in order to keep a project moving
forward, they need to ensure their team is motivated to do the work and are
rewarded for their part in bringing the leader’s vision to life.
● Enthusiastic. They are passionate believers in their ideas and goals and have the
drive to make them happen.
○ Their enthusiasm is essential for rallying support from the teams they lead.
● Emotionally aware. They are aware of their emotions and aware of the feelings of
others.
○ Their empathy fosters connection and inspires teams to recognize and see
the value in their contributions.
○ By trusting in their teams and establishing a culture of trust, visionary leaders
are trusted in return.

Why is visionary leadership important in business?

● For any business to be successful, its leader must be passionate, strong-willed, and
equipped with the necessary knowledge to achieve long-term goals.
● Visionary leaders possess these foundational traits of the trade but have even more
to offer.
○ They have the keen ability to both envision a company’s future and to rally
employees around a shared vision.
○ A visionary business leader understands that inspiring and motivating
employees to embrace the discipline and creativity required to make this
vision a reality in turn cultivates greater productivity.
○ And that is excellent for business.

Benefits of Visionary Leadership Style

● Visionary people could see the big picture and take ultimate responsibility i.e. as
a visionary leader, by looking at the big picture followers will be able to link various
events with one another and take proactive actions before the problems shoots up
which means the followers are always ahead and could see their final destination
clearly.
● Moreover, these types of people are intelligent risk takers as moving towards
achieving a new goal there is no guarantee that strategies will work, but visionaries
 are comfortable with the uncertainty and take as many measures possible to ensure
the plan is successful.
● Another benefit of being visionary is their ability to focus on the worthy.
○ When you focus your energy on what matters, you do not get distracted by
extraneous forces.
○ As a result, you always have your vision and ultimate goal in mind and you
remind it to others as well no matter how difficult the situation becomes.
○ However, this type of approach is best and most successful with team
members who have clarity on their goals about why they are doing, what they
are doing and when they need a morale boost and celebrating their success
on breaking down large goals via achievable minute steps and routines.
● Finally, their expertise in organizing and their skilled communications in a
process that put together departments and operations that help them reach the new
vision.

Challenges of Visionary Leadership Style

Unlike others, visionary leaders also face the heat of its nature and commit mistakes.
1. The primary factor which affects them is their single-track mind i.e. there is a
probability that visionary leaders could be too concerned with the vision to pay
attention to necessary details.
They keep on focusing on the future and lag in the present taking into
account situations that require their attention in the present.
Sometimes such leadership failes and does not work as a visionary
leader becomes so attached to a vision that they could risk missing
out on future ideas which might also benefit the company.
They might be unwilling to consider a change in the plan or
abandoning the vision altogether if they have to seek another
alternative, leaving the team and an organization behind in a lurch
with unexpected outcomes.
2. Another prime factor of visionary leadership’s limitation is misaligned strategy, not
having enough funding and lack of confidence.
During startups, some visionaries fall short of funding to support the execution
and thus misalign the strategies of business and find themselves seemingly
moving in hassle and teams experience the frustration of a lot of activity with
no results and losing the confidence in the end.
3. Finally, the most crucial factor is lack of coordination in teams and organization.
There are instances when heads are not honest with each other which results in poor
execution of projects or hanging the plans in between.
COMPARE CHARISMATIC LEADERSHIP WITH VISIONARY LEADERSHIP

Charismatic leadership and visionary leadership are two distinct leadership styles that have their
own unique characteristics and approaches.
While there may be some overlap between the two, it is important to understand the differences
and similarities between charismatic leadership and visionary leadership.
In this comparison, we will explore the qualities, behaviors, and impacts of both leadership
styles.

1. Max Weber, a sociologist, defined charisma (from the Greek for “gift”) more than a
century ago as “a certain quality of an individual personality, by virtue of which
he or she is set apart from ordinary people and treated as endowed with
supernatural, superhuman, or at least specifically exceptional powers or
qualities.”
On the other hand, Visionary Leadership is defined as an operation to
influence others in order to create a better future and solve problems in an innovative
way.
2. Charismatic leadership is characterized by the leader's ability to inspire and influence
others through their personal charm, magnetism, and persuasive communication skills.
Strong presence and ability to captivate and motivate their followers through their words
and actions.
Often seen as role models and are able to create a sense of loyalty and devotion among
their followers.
EXAMPLE: The late co-founder of Apple Inc., Steve Jobs, is often cited as a prime
example of charismatic leadership. Jobs had a magnetic presence and was known for
his ability to captivate and inspire his employees and customers. His visionary ideas,
persuasive communication skills, and personal charisma played a significant role in
Apple's success.
On the other hand, visionary leadership is focused on creating and
communicating a compelling vision for the future of the organization.
Have a clear and inspiring vision that they share with their team members,
creating a sense of purpose and direction.
Able to articulate a long-term goal that takes the organization forward and
creates an atmosphere where team members can build their knowledge and
abilities.
Able to inspire and empower their team members to work towards a common
goal.
EXAMPLE: An example of a visionary leader is Elon Musk, the CEO of Tesla and
SpaceX. Musk has a clear vision of transforming the transportation and space
industries. He envisions a future where electric vehicles and sustainable energy
sources are the norm, and where humanity becomes a multi-planetary species.
Musk's ability to communicate this vision and inspire his teams has led to
groundbreaking innovations in electric vehicles and space exploration.

3. One key difference between charismatic leadership and visionary leadership lies in their
focus.
Charismatic leadership is often centered around the leader's personal qualities and their
ability to inspire and influence others through their charisma.
 More about the leader's individual presence and their ability to create a strong emotional
connection with their followers.
On the other hand, visionary leadership is more focused on the organization's
future and the leader's ability to create and communicate a compelling vision.
It is about inspiring and aligning the team members towards a shared goal.

4. Another difference lies in the source of influence.

Charismatic leaders often rely on their personal charm, magnetism, and persuasive
communication skills to influence others
Able to create a strong emotional connection with their followers and inspire them to
follow their lead.
Visionary leaders, on the other hand, rely on the power of their vision and their
ability to communicate it effectively.
Able to inspire and motivate others by painting a picture of a better future and
showing how their actions contribute to that vision.

5. In terms of impact, charismatic leadership can create a strong sense of loyalty and
devotion among followers.
Often able to inspire their followers to go above and beyond and achieve exceptional
results.
However, charismatic leadership can also have its drawbacks.
Can sometimes lead to a dependency on the leader, where followers rely heavily on the
leader's presence and guidance.
This can create challenges when the leader is not available or when there is a need for
decentralized decision-making.
On the other hand, visionary leadership has a broader impact on the organization
as a whole.
Able to align the efforts of the team members towards a common goal.
This can lead to increased motivation, engagement, and productivity among team
members.
Also foster a culture of innovation and creativity, as they encourage their team
members to think outside the box and find new ways to achieve the vision.
This can result in long-term growth and success for the organization.
6. While charismatic leadership and visionary leadership have their own distinct qualities, it
is important to note that they are not mutually exclusive.
In fact, many charismatic leaders also possess visionary qualities and vice versa.
A leader can be both charismatic and visionary, combining the ability to inspire and
influence others with a clear and compelling vision for the future.
Conclusion
In conclusion, charismatic leadership and visionary leadership are two distinct leadership styles
with their own unique characteristics and approaches. Charismatic leadership focuses on the
leader's personal qualities and their ability to inspire and influence others through their charisma,
while visionary leadership is centered around creating and communicating a compelling vision
for the organization. Both styles have their own impacts and benefits, and a leader can possess
qualities of both charismatic and visionary leadership. Ultimately, the most effective leaders are
those who are able to inspire and motivate others while also providing a clear direction for the
future.
COMPARE VISIONARY LEADERSHIP WITH TRANSFORMATIONAL LEADERSHIP