28 Part One Environmental and Organizational Context
Real Case: The Big Squeeze on Workers
On his recent family vacation in Arizona, Peter Spina spent much of his time camped out under a palm tree while his kids splashed around in the Scottsdale Princess Hotel’s luxurious pool. Spina wasn’t lounging.
He was working—hammering out deals on his cell phone in a mad dash to break new accounts at Vulcan Ventures Inc., where he’s publisher of The Sporting News. Spina says the downturn has forced him to work even longer hours than he did during the boom—about 15% more. Ditto for his sales force. Whereas once he had lots of bonus money to throw around, he now tries to make up for the tough slog by bringing popsicles to the office on hot days. The added hustling is one reason his team has racked up revenue gains of 46% this year in an abysmal ad market. “They’re working longer and harder,” says Spina.
Much has been made of the recent upsurge in pro-ductivity. Although recessions usually bring slides in this efficiency measure, technology has made the econ-omy more productive than ever before. But tell that to white-collar workers, and you’re likely to hear that the gains have come on their backs. Rather than bring relief, layoff survivors say, the downturn has only socked it to them more. They complain about managing the orphaned workloads of downsized colleagues, scouring new avenues for business, and fighting for high-profile posts so if the ax falls, it won’t hit them. “What we’re discovering is that in this early stage of recovery, not only are companies making people work harder, but, believe me, some people want to,” says J.P. Morgan Chase & Co. senior economist James E. Glassman.
“They’re trying to protect their job security.”
That gripping desperation is easy for companies to use in their favor. Mike Hewitt, director of client ser-vices at consulting firm Aquent, says he and his staff have been bending over backwards to meet with clients who don’t have any work for them so the company can get a jump on future business and be ready to roll when the rebound kicks in.
But it’s not just fear that’s motivating today’s work-place. A number of other structural changes are also helping bosses to extract maximum productivity from their ranks. From the increased use of temps, to the reclassification of hourly workers into salaried employ-ees ineligible for overtime pay, to the rise in variable pay that puts part of workers’ paychecks at risk, companies are now able to get more out of less.
It’s hard to say just how much more, given the state of statistical record-keeping. The Bureau of Labor Statistics says overall weekly hours worked have dropped—in part due to manufacturers slashing hours.
But economists say it’s impossible to draw an accurate picture from the BLS data. They note that the data is flawed because it often builds in an assumption that all levels of employees work 35 hours a week—managers and hourly staff alike. To which many economists reply:
Come on. Morgan Stanley Dean Witter & Co. chief economist Stephen Roach, for example, believes the BLS numbers understate the number of hours worked, therefore overstating productivity.
Still, whatever the numbers say, there’s no doubt that right now employees feel they have little choice but to accept the grueling loads. Despite some evidence of a rebound, the job market in many quarters is still weak.
Job cuts are no longer a last resort in hard times but an ongoing tool for matching supply with demand.
This is one reason some economists predict a replay, at least initially, of the early-1990s jobless recovery.
Rather than scoop up more permanent hires at the first whiff of demand, economists say CEOs are likely to be leery, especially with economic data so mixed. Many have bad memories of boom-time hiring binges in which they took on mediocre people just to fill slots and then wound up having to pay weeks of costly severance.
Instead, economists say CEOs are likely to focus first on extracting even more from their existing ranks until demand reaches a breaking point. The big question now, asks Mary Hammershock, vice-president for human resources for Silicon Valley’s Blue Martini Software, is
“how much longer can you get people to do this when the upside has gone away?”
Already, companies are looking first to bring in con-tract workers that they can quickly tap and zap without paying any benefits or severance. In fact, the temps have been the fastest growing sector of employment. And they aren’t accounted for as regular employees. This helps companies that use a lot of them, like Cisco Systems Inc., to drive up revenue per employee.
The growing use of the just-in-time workforce is not the only means by which companies are priming the productivity pump. Workers complain that many employers are taking advantage of outdated labor laws by misclassifying them as salaried-exempt so they can skirt overtime pay. Already, Wal-Mart Stores, Taco Bell,
Chapter 1 Introduction to Organizational Behavior: An Evidence-Based Approach 29
Starbucks, and U-Haul, among others, have been slapped with class actions. In the case of General Dynamics Corp., this resulted in a $100 million award that is now on appeal. At Farmer’s Insurance, employees got $90 million. Some employers are so worried about the issue that they are now doing wage-and-hour audits.
Another potential productivity enhancer: incentive pay, which enables bosses to motivate people to work harder during tough times to make up for lost wages. General Electric Co. will soon start factoring customer perfor-mance into employee pay, putting an even greater chunk of compensation at risk. Under this system, if a customer’s business suffers, so does the GE employee’s paycheck.
Yet even as they push existing employees, companies also have to think about what’s down the road—the likely return of tight labor markets and a replay of the 1990s’ battle for talent. Demographers and labor experts note that the recession merely masked the deep skills shortages lurking within the labor force. “It will be even worse than it was in 2000,” predicts Texas Instruments Inc. Chairman, CEO, and President Tom Engibous.
Like many CEOs, Engibous faces the tough job of balancing the need to juice profits right now with the longer term goal of cultivating his choice employees.
That’s why he has launched a “re-recruiting initiative” at TI, asking workers what they need—days off, new assignments, a different boss—to keep them satisfied right now. For companies that squeeze too hard, it prob-ably already is too late.
1. Do you agree or disagree with the feeling of many downsizing survivors that increased productivity
“comes on their backs”? What does this mean and how does this have implications for managing these employees?
2. What impact can employing temporary, just-in-time workers have for employers? For existing full-time employees? For the temporary workers?
3. On balance, on the basis of this case, do you believe the challenges facing the management of human resources will be easier or more difficult in the near future? Why?
Organizational Behavior Case: How Is This Stuff Going to Help Me?
Jane Arnold wants to be a manager. She enjoyed her accounting, finance, and marketing courses. Each of these provided her with some clear-cut answers. Now the professor in her organizational behavior course is telling her that there are really very few clear-cut answers when it comes to managing people. The profes-sor has discussed some of the emerging challenges and the historical background and ways that behavioral sci-ence concepts play a big role in the course. Jane is very perplexed. She came to school to get answers on how to be an effective manager, but this course surely doesn’t seem to be heading in that direction.
1. How would you relieve Jane’s anxiety? How is a course in organizational behavior going to make her a better manager? What implications does an evidence-based approach have?
2. Why did the professor start off with a brief overview of emerging challenges?
3. How does a course in organizational behavior differ from courses in fields such as accounting, finance, or marketing?
Organizational Behavior Case: Too Nice to People
John has just graduated from the College of Business Administration at State University and has joined his fam-ily’s small business, which employs 25 semiskilled work-ers. During the first week on the job, his grandfather called him in and said: “John, I’ve had a chance to observe you
working with our employees for the past two months and, although I hate to, I feel I must say something. You are just too nice to people. I know they taught you that human behavior stuff at the university, but it just doesn’t work here. I remember when we discussed the Hawthorne
30 Part One Environmental and Organizational Context
Hank James has been section head for the accounting group at Yake Company for 14 years. His boss, Mary Stein, feels that Hank is about ready to be moved up to the corporate finance staff, but it is company policy to send people like Hank to the University Executive Development Program before such a promotion is made. Hank has enrolled in the program; one of the first parts deals with organizational behavior. Hank felt that after 14 years of managing people, this would be a snap.
However, during the discussion on organizational behavior, the professor made some comments that really bothered Hank. The professor said:
Most managers know their functional specialty but do a lousy job of managing their people. One of the
problems is that just because managers have a lot of experience with people, they think they are experts.
The fact is that behavioral scientists are just beginning to understand human behavior. In addition, to effectively manage people, we also have to somehow be able to better predict and control organizational behavior. Some models are now developed and
research is accumulating that we hope will help the manager better understand, predict, and manage organi-zational behavior.
Hank is upset by the fact that his professor apparently discounts the value of experience in managing people, and he cannot see how a conceptual framework that some professor dreamed up and some esoteric research can help him manage people better.
1. Do you think Hank is justified in his concerns after hearing the professor? What role can experience play in managing people?
2. What is the purpose of conceptual frameworks such as those presented in this chapter? How would you weigh the relative value of studying theories and research findings versus “school-of-hard-knocks”
experience for the effective management of people?
3. Using the conceptual framework presented in the chap-ter, how would you explain to Hank that this could help him better manage people in his organization?
Organizational Behavior Case: Conceptual Model: Dream or Reality?
studies when I was in school and everybody at the univer-sity seemed excited about them, but believe me, there is more to managing people than just being nice to them.”
1. How would you react to your grandfather’s com-ments if you were John?
2. Do you think John’s grandfather understood and interpreted the Hawthorne studies correctly?
3. What phases of management do you think John’s grandfather has gone through in this family business?
Do you think he understands the significance of recent trends in the environment and how the new paradigm will affect his business?
4. How would you explain to your grandfather the new perspective that is needed and how the study of an evidence-based approach to organizational behav-ior will help the business be successful in the new paradigm?
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