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Indra Nooyi is a highly competent person and leader, as suggested in her remarks and confirmed through many forms of recognition by others. This opening feature suggests just a few of the elements in her rich portfolio of personal competencies. We will have more to say about these and the other competencies demonstrated by Nooyi as the chapter unfolds.
The Organizational Behavior Division of the Academy of Management, the lead- ing professional association dedicated to creating and disseminating knowledge about management and organizations, identifies the major topics of organizational behavior as follows:
individual characteristics such as beliefs, values and personality; individual processes such as perception, motivation, decision making, judgment, commitment and control; group characteristics such as size, composition and structural properties;
group processes such as decision making and leadership; organizational processes and practices such as goal setting, appraisal, feedback, rewards, behavioral aspects of task design; and the influence of all of these on such individual, group, and organi- zational outcomes as performance, turnover, absenteeism, and stress.2
We address all of these topics and more in this book.
One theme of this book is to demonstrate the importance of organizational behavior to your own performance. You are or probably will be an employee of an organization—and in all likelihood of several organizations—during your career. You may eventually become a team leader, a manager, or an executive. Studying organi- zational behavior will help you attain the knowledge and competencies needed to perform effectively in all of these roles. The knowledge and competencies that you acquire will help you diagnose, understand, explain, and act on what is happening around you in your job.
In the first section of this chapter, we introduce the elements of leadership versus management. Our general learning framework for achieving effective performance by individuals, teams, and organizations is presented next. In the remaining sections of this chapter, we explain each of the seven key competencies that are woven into the chapters throughout the book.
Organizational behavior is the study of individuals and groups within an organiza- tional context, and the study of internal processes and practices as they influence the effectiveness of individuals, teams, and organizations. It does this by taking a system approach. That is, organizational behavior strives to understand and improve people–organization rela- tionships in terms of the individual, team, organization, and broader social system.
Leadership versus Management
Leadership is the process of developing ideas and a vision, living by values that support those ideas and that vision, influencing others to embrace them in their own behaviors, and mak- ing hard decisions about human and other resources. Noel Tichy, who has studied many outstanding leaders, describes contemporary leadership in these words:
Leadership is accomplishing something through other people that wouldn’t have happened if you weren’t there. And in today’s world, that’s less and less through command and control, and more and more through changing people’s mindsets and hence altering the way they behave. Today, leadership is being able to mobi- lize ideas and values that energize other people.3
A leader is a person who exhibits the key attributes of leadership—ideas, vision, values, influencing others, and making tough decisions. Indra Nooyi demonstrates all of these Learning Goal
1. State the core differences between leadership and management.
attributes. Throughout this book, you will develop a deep appreciation for the fact that leadership is like a prism—something new and different appears each time it is looked at from another angle. Our purpose is to identify and describe diverse leader- ship issues, ideas, and approaches. In doing so, we present various leadership perspec- tives, along with their strengths, limitations, and applications. We also wrote the book to give you personal insights into your own leadership abilities and those that need further development. Our assumption is simple: Leadership can be learned but not taught. Learning leadership means that you are actively seeking to develop the com- petencies and make the personal changes required to become a leader.4
In contrast to leadership, management focuses on looking inward, improving the present, tight controls, directing, coordinating, efficiency, and the like. Likewise, in contrast to being a leader, a manager directs, controls, and plans the work of others and is responsible for results. Effective managers bring a degree of order and consis- tency to the work for their employees. To be effective, managers need to exhibit the attributes of leadership and/or management in various situations. Within business and other types of organizations, all managers are not leaders. Leaders are usually identified by such titles as manager, executive, supervisor, team leader, and the like. We often use the generic title of manager to refer to such individuals. Regardless of title, effective leaders and managers in organizations usually accept three key functions in their roles:
Authority
• : the right to make decisions, Responsibility
• : assignment for achieving a goal, and Accountability
• : acceptance of success or failure.5
Table 1.1 provides an overview of the differences between the essentials of con- temporary leadership and management. The pairs of attributes within each category are presented as contrasts; however, most managers don’t function at these extreme contrasts. However, patterns that tend toward leadership on the one hand or manage- ment on the other hand are likely to emerge as managers develop and utilize their competencies.
As you review Table 1.1, think about the relative emphasis placed on leadership or management by a person for whom you have worked. How would you assess Indra Nooyi on each of the contrasts in Table 1.1? Managers may lean more heavily toward either the leadership or management profile at various times as they face different issues and problems. However, most tend to operate primarily in terms of either the leadership or the management profile.6
Being a leader in an organization is not limited to a very few. Consider the remarks by Indra Nooyi: “I believe that each one of PepsiCo’s 185,000 employees is a leader. There are two reasons for this. First, PepsiCo is a meritocracy. Hard work gets recognized and small wins are celebrated. Second, PepsiCo has an entrepreneur- ial culture, so people have the ability to constantly take risks and seek ways to both improve and grow.”7
Learning Framework
The long-term effectiveness of an organization is determined by its ability to antici- pate, manage, and respond to changes in its environment. Shareholders, unions, employees, financial institutions, and government agencies, among others, exert numerous and ever-changing pressures, demands, and expectations on the organiza- tion. The seven competencies presented in this chapter are linked to the actions of individuals, teams, and organizations as a whole. Throughout this book, therefore, we discuss the relationships among these various competencies and organizational behavior in general.
Learning Goal
2. Outline the framework for learning about organizational behavior.
The framework for learning about organizational behavior and improving the effectiveness of employees, teams, and organizations consists of five basic parts: (1) the key competencies, with particular emphasis on individual and organizational ethics in Chapter 2, that underlie and integrate the next four parts; (2) the individual in organi- zations; (3) leadership and team behaviors in organizations; (4) the organization itself;
and (5) integrating cases at the end of the book, as shown in Figure 1.1. This figure suggests that these parts are not independent of each other. The relationships among them are much too dynamic—in terms of variety and change—to define them as laws or rules. As we discuss each part here and throughout this book, the dynamics and complexities of organizational behavior will become clear. Most of this chapter focuses on explaining each of the seven key competencies that are developed and illustrated throughout the book.
The Individual in Organizations
Each individual makes assumptions about those with whom she or he works or spends time in leisure activities. To some extent, these assumptions influence a per- son’s behavior toward others. An effective employee understands what affects her or his own behavior before attempting to influence the behaviors of others. In Part 2, Chapters 3 through 8, we focus on the behavior, attitudes, personality, motivations,
TABLE 1.1 Leadership and Management: A Comparison
CATEGORY LEADERSHIP MANAGEMENT
Model the Way • Leads by example
• Aligns values with actions
• Understands your personal values
Leads by remote control Tells people what to do Inspire a Shared Vision • Imagines exciting
possibilities
• Appeals to shared aspirations
• Paints big picture of what we aspire to be
Focuses on day-to-day activities
Does things right Challenge the Process • Takes risks and learns from
mistakes
• Searches for opportunities to change, grow, and improve
• Asks “What can we learn?”
Goes by the book Tight controls
Enable Others to Act • Fosters collaboration by building trust
• Shares power and decision making
• Actively listens to diverse points of view
Makes all decisions Directs and controls
Encourage from the Heart • Recognizes contributions from others
• Celebrates victories
• Is passionate about helping others grow
Little recognition of others’
accomplishments Rewards not aligned with results
Source: Adapted from Kouzes, J. M., and Posner, B. Z. The Leadership Challenge, 4th ed., San Francisco:
Jossey-Bass, 2007; Taylor, T., Martin, B. N., Hutchinson, S., and Jinks, M., Examination of leadership practices of principals identified as servant leaders. International Journal of Leadership in Education, 2007, 10, 401–419; Ergeneli, A., Gohar, R., and Temirbekova, Z., Transfer national leadership: Its relationship to culture value dimensions. International Journal of Intercultural Relations, 2007, 31, 703–725.
and stressors of each individual. The individual is the starting point of organizational effectiveness. Understanding the individual is crucial for enhancing individual, team, and organizational effectiveness. Each person is a physiological system composed of various subsystems—digestive, nervous, circulatory, and reproductive—and a psy- chological system composed of various subsystems—attitudes, perceptions, learning capabilities, personality, needs, feelings, and values. In Part 2, we concentrate on the individual’s psychological system. Both internal and external factors shape a person’s behavior on the job. Among others, internal factors include learning ability, motiva- tion, perception, attitudes, personality, and values. Among the external factors that affect a person’s behavior are the organization’s reward system, groups and teams, managerial leadership styles, organizational culture, and the organization’s design. We examine these and other factors in Parts 3 and 4.
Leaders and Teams in Organizations
Being inherently social, an individual generally doesn’t choose to live or work alone.
Most of the individual’s time is spent interacting with others. Each person is born into a family, worships in groups, works in teams, and plays in groups. A person’s identity is influenced by the ways in which other people and groups perceive and treat that person. For these reasons—and because many managers and employees spend consid- erable amounts of time interacting with others—a variety of competencies are usually vital to each person, team, and organization as a whole.
Effective organizations have leaders who can integrate customer, employee, and organizational goals. The ability of organizations to achieve their goals depends on the degree to which leadership abilities and styles enable managers and team leaders to plan, organize, control, influence, and act effectively. In Part 3, Chapters 9 through 13, we examine how leaders influence others and how individuals can develop their lead- ership competencies. Effective leadership involves developing multiple competencies.
Part 2: The Individual in Organizations (Chapters 3–8)
Part 1: Introduction and Ethical Foundations (Chapters 1 and 2) Part 4: The
Organization (Chapters 14–17)
Part 3: Leadership and Team Behaviors
(Chapters 9–13)
Part 5: Integrating Cases; Appendix : BizFlix
FIGU RE 1.1 Learning Framework for Enhanced Individual, Team, and Organizational Effectiveness
How employees communicate with superiors, peers, subordinates, and others can help make them effective team members or lead to low morale, lack of commitment, and reduced organizational effectiveness. For that reason and because most managers and professionals spend considerable amounts of time dealing with others, interpersonal communication is the foundation for this part.
The Organization Itself
In Part 4, Chapters 14 through 17, we consider the factors that influence individual, team, leader, and organizational effectiveness. Decision making in organizations isn’t particularly orderly or totally within the control of individuals. We identify and explore the phases of decision making and core models of decision making.
For effective performance, all employees must clearly understand their jobs and the organization’s design. We identify factors that influence organization design and present some typical designs that facilitate organizational effectiveness.
Individuals enter organizations to work, earn money, and pursue career goals. We discuss how employees learn what is expected of them. Basically, they do so by expo- sure to the organization’s culture. It is the set of shared assumptions and understand- ings about how things really work—that is, policies, practices, and norms—that are important to supporting, or perhaps diminishing, individual, team, or organizational effectiveness.
The management of change involves adapting an organization to the demands of the environment and modifying the actual behaviors of employees. We explore the dynamics of organizational change and present several basic strategies for achieving change to improve organizational effectiveness.
Competencies for Individual, Team, and Organizational Effectiveness
The first part in Figure 1.1 is competencies for individual, team, and organizational effectiveness, with special emphasis on ethical foundations. Seven competencies are the focus of this chapter. With the exception of the self competency, which is inher- ent to individuals, the other six competencies apply to individuals, teams, and the organization as a whole. Indra Nooyi has developed a mosaic of individual competen- cies over time that enables her to be a successful leader at PepsiCo. A competency is an interrelated cluster of knowledge, skills, and abilities needed by an individual, team, or organization for effective performance. A number of competencies are critical to the effectiveness and performance of most organizations.8 The seven key competencies affect the behavior and effectiveness of each individual, team, and organization.
Our emphasis is on the human side of the organization. The competencies apply to individuals and teams in all functional areas and levels of the organization as well as the organization as a whole. There are a number of other functional competencies (marketing, planning, accounting, finance, production, personnel, and so on) as well as technical competencies that are essential for individual, team, and organizational effectiveness.
The competencies emphasized are important to the effectiveness of virtually all employees, not just those in managerial and leadership roles. One of the goals of this book is to define, describe, and illustrate how the seven key competencies can be used by individuals, teams, and members of the entire organization. These ideas are woven into the discussion of organizational behavior and effectiveness throughout.
Another goal of this book is to help you to fully understand and further develop these seven competencies. Before reading further, we invite you to assess yourself in these seven key competencies. Again, with the exception of the self competency, these competencies also need to be understood, developed, and applied at the team
and organizational levels. They are developed throughout the book. Go to the end of this chapter and complete the Key Competencies Self-Assessment Inventory on pages 27–28. Figure 1.2 suggests that these competencies are interrelated and that drawing rigid boundaries between them isn’t feasible. Moreover, this figure conveys that the ethics competency plays a foundational role in implementing the other six competencies. All of the competencies are discussed in considerable depth in specific chapters.
Many leading organizations use competency frameworks, including the types of competencies we use. The competencies are used to select, develop, assess, and promote employees to foster team and organizational effectiveness. A few of these organizations include PepsiCo, Bank of America, Exxon-Mobil, John Hancock, Merck
& Co., and AT&T.9 Why do they use competency models? For years, many top-level executives believed that there were two ways to think about identifying successful individuals. From a selection perspective, the approach was to identify the common characteristics of effective individuals and try to identify them early in their career.
The other perspective was to identify those employees who management thought were best able to take advantage of developmental opportunities, if provided. At the individual level, the competency-based approach identifies employees who can develop or possess key competencies and provides them with challenging opportuni- ties to learn. Throughout this book, there are opportunities to learn how successful leaders, employees, teams, and the organization as a whole use these competencies.
One successful outcome of using this book is your further development of the com- petencies needed to be an effective professional or leader and to understand how they apply to teams and the organization as a whole.
Self
Change Diversity
Ethics
Teams Across
Cultures
Communication
FIGU RE 1.2 Competencies for Individual, Team, and Organizational Effectiveness
Note: These competencies focus on the human side of the organization. They apply to individuals and teams in all functional areas and levels of the organization as well as the organization as a whole. There are a number of other functional competencies (marketing, planning, accounting, finance, production, personnel, and so on) as well as technical competencies that are essential for individual, team, and organizational effectiveness.
Ethics Competency
The ethics competency includes the knowledge, skills, and abilities to incorporate values and principles that distinguish right from wrong when making decisions and choosing behav- iors. Ethics are the values and principles that distinguish right from wrong.10
Key Attributes
The key attributes of the ethics competency include the knowledge, skills, and abilities of individuals, teams, and the organization to be effective in doing the following:
• Identifying and describing the principles of ethical decision making and behavior.
• Assessing the importance of ethical issues in consider- ing alternative courses of action. The decision to shop at Walmart versus Best Buy is not related to any ethical issue of consequence for most individuals. In contrast, when purchas- ing a new car, some individuals consider the gasoline mileage an important ethical issue that allows them to make a deci- sion to help reduce air pollution to improve the atmosphere.
• Applying governmental laws and regulations, as well as the employer’s rules of conduct, in making decisions. In general, the greater a person’s level of responsibilities and authority, the more the person is likely to face increasingly complex and ambiguous ethical issues and dilemmas. For example, an associate at Best Buy does not make decisions about pur- chasing goods from foreign countries that often involve ethical issues. The associ- ate has no authority and responsibility in this decision-making area at Best Buy.
Demonstrating dignity and respect for others in working relationships, such as
•
taking action against discriminatory practices as individually feasible and in terms of a person’s position. The manager at a Walmart store is more able to stop an employee from showing disrespect to members of a minority group than is a checkout associate in the store.
Being honest and open in communication, limited only by legal, privacy, and
•
competitive considerations (e.g., do what you or the organization say and say what you or the organization do).
Ethical Dilemmas
The ethical issues facing organizations, leaders, and other employees have grown sig- nificantly in recent years, fueled by public concern about how business is conducted.
This point is developed through Ethics Competency features throughout the book.
Ethical behavior can be difficult to define, especially in a global economy with its varied beliefs and practices. Although ethical behavior in organizations clearly has a legal component, it involves more than that.
Managers, employees, and organizations alike face situations in which there are no clear right or wrong answers. An ethical dilemma occurs when a decision must be made that involves multiple values. An ethical dilemma doesn’t always involve choosing right over wrong because there may be several competing values. Some ethical dilemmas arise from competitive and time pressures, among other factors.11 Consider these two real-life examples of ethical dilemmas:
A fellow employee told me that he plans to quit the company in two months and
•
start a new job that has been guaranteed to him. Meanwhile, my manager told me that she wasn’t going to give me a new opportunity in our company because she was going to give it to my fellow employee now. What should I do?
Learning Goal
3. Describe the ethics competency and its contribution to effective performance.