case study on values in organisational behaviour

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Values and Behaviors 1 A case study in organizational value communication: understanding value/behavior relationship

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Organizational behavior.

Neal M. Ashkanasy Neal M. Ashkanasy University of Queensland
and Alana D. Dorris Alana D. Dorris University of Queensland
https://doi.org/10.1093/acrefore/9780190236557.013.23
Published online: 29 March 2017

Organizational behavior (OB) is a discipline that includes principles from psychology, sociology, and anthropology. Its focus is on understanding how people behave in organizational work environments. Broadly speaking, OB covers three main levels of analysis: micro (individuals), meso (groups), and macro (the organization). Topics at the micro level include managing the diverse workforce; effects of individual differences in attitudes; job satisfaction and engagement, including their implications for performance and management; personality, including the effects of different cultures; perception and its effects on decision-making; employee values; emotions, including emotional intelligence, emotional labor, and the effects of positive and negative affect on decision-making and creativity (including common biases and errors in decision-making); and motivation, including the effects of rewards and goal-setting and implications for management. Topics at the meso level of analysis include group decision-making; managing work teams for optimum performance (including maximizing team performance and communication); managing team conflict (including the effects of task and relationship conflict on team effectiveness); team climate and group emotional tone; power, organizational politics, and ethical decision-making; and leadership, including leadership development and leadership effectiveness. At the organizational level, topics include organizational design and its effect on organizational performance; affective events theory and the physical environment; organizational culture and climate; and organizational change.

organizational psychology
organizational sociology
organizational anthropology

Introduction

Organizational behavior (OB) is the study of how people behave in organizational work environments. More specifically, Robbins, Judge, Millett, and Boyle ( 2014 , p. 8) describe it as “[a] field of study that investigates the impact that individual groups and structure have on behavior within organizations, for the purposes of applying such knowledge towards improving an organization’s effectiveness.” The OB field looks at the specific context of the work environment in terms of human attitudes, cognition, and behavior, and it embodies contributions from psychology, social psychology, sociology, and anthropology. The field is also rapidly evolving because of the demands of today’s fast-paced world, where technology has given rise to work-from-home employees, globalization, and an ageing workforce. Thus, while managers and OB researchers seek to help employees find a work-life balance, improve ethical behavior (Ardichivili, Mitchell, & Jondle, 2009 ), customer service, and people skills (see, e.g., Brady & Cronin, 2001 ), they must simultaneously deal with issues such as workforce diversity, work-life balance, and cultural differences.

The most widely accepted model of OB consists of three interrelated levels: (1) micro (the individual level), (2) meso (the group level), and (3) macro (the organizational level). The behavioral sciences that make up the OB field contribute an element to each of these levels. In particular, OB deals with the interactions that take place among the three levels and, in turn, addresses how to improve performance of the organization as a whole.

In order to study OB and apply it to the workplace, it is first necessary to understand its end goal. In particular, if the goal is organizational effectiveness, then these questions arise: What can be done to make an organization more effective? And what determines organizational effectiveness? To answer these questions, dependent variables that include attitudes and behaviors such as productivity, job satisfaction, job performance, turnover intentions, withdrawal, motivation, and workplace deviance are introduced. Moreover, each level—micro, meso, and macro—has implications for guiding managers in their efforts to create a healthier work climate to enable increased organizational performance that includes higher sales, profits, and return on investment (ROE).

The Micro (Individual) Level of Analysis

The micro or individual level of analysis has its roots in social and organizational psychology. In this article, six central topics are identified and discussed: (1) diversity; (2) attitudes and job satisfaction; (3) personality and values; (4) emotions and moods; (5) perception and individual decision-making; and (6) motivation.

An obvious but oft-forgotten element at the individual level of OB is the diverse workforce. It is easy to recognize how different each employee is in terms of personal characteristics like age, skin color, nationality, ethnicity, and gender. Other, less biological characteristics include tenure, religion, sexual orientation, and gender identity. In the Australian context, while the Commonwealth Disability Discrimination Act of 1992 helped to increase participation of people with disabilities working in organizations, discrimination and exclusion still continue to inhibit equality (Feather & Boeckmann, 2007 ). In Western societies like Australia and the United States, however, antidiscrimination legislation is now addressing issues associated with an ageing workforce.

In terms of gender, there continues to be significant discrimination against female employees. Males have traditionally had much higher participation in the workforce, with only a significant increase in the female workforce beginning in the mid-1980s. Additionally, according to Ostroff and Atwater’s ( 2003 ) study of engineering managers, female managers earn a significantly lower salary than their male counterparts, especially when they are supervising mostly other females.

Job Satisfaction and Job Engagement

Job satisfaction is an attitudinal variable that comes about when an employee evaluates all the components of her or his job, which include affective, cognitive, and behavioral aspects (Weiss, 2002 ). Increased job satisfaction is associated with increased job performance, organizational citizenship behaviors (OCBs), and reduced turnover intentions (Wilkin, 2012 ). Moreover, traditional workers nowadays are frequently replaced by contingent workers in order to reduce costs and work in a nonsystematic manner. According to Wilkin’s ( 2012 ) findings, however, contingent workers as a group are less satisfied with their jobs than permanent employees are.

Job engagement concerns the degree of involvement that an employee experiences on the job (Kahn, 1990 ). It describes the degree to which an employee identifies with their job and considers their performance in that job important; it also determines that employee’s level of participation within their workplace. Britt, Dickinson, Greene-Shortridge, and McKibbin ( 2007 ) describe the two extremes of job satisfaction and employee engagement: a feeling of responsibility and commitment to superior job performance versus a feeling of disengagement leading to the employee wanting to withdraw or disconnect from work. The first scenario is also related to organizational commitment, the level of identification an employee has with an organization and its goals. Employees with high organizational commitment, job satisfaction, and employee engagement tend to perceive that their organization values their contribution and contributes to their wellbeing.

Personality represents a person’s enduring traits. The key here is the concept of enduring . The most widely adopted model of personality is the so-called Big Five (Costa & McCrae, 1992 ): extraversion, agreeableness, conscientiousness, emotional stability, and openness. Employees high in conscientiousness tend to have higher levels of job knowledge, probably because they invest more into learning about their role. Those higher in emotional stability tend to have higher levels of job satisfaction and lower levels of stress, most likely because of their positive and opportunistic outlooks. Agreeableness, similarly, is associated with being better liked and may lead to higher employee performance and decreased levels of deviant behavior.

Although the personality traits in the Big Five have been shown to relate to organizational behavior, organizational performance, career success (Judge, Higgins, Thoresen, & Barrick, 2006 ), and other personality traits are also relevant to the field. Examples include positive self-evaluation, self-monitoring (the degree to which an individual is aware of comparisons with others), Machiavellianism (the degree to which a person is practical, maintains emotional distance, and believes the end will justify the means), narcissism (having a grandiose sense of self-importance and entitlement), risk-taking, proactive personality, and type A personality. In particular, those who like themselves and are grounded in their belief that they are capable human beings are more likely to perform better because they have fewer self-doubts that may impede goal achievements. Individuals high in Machiavellianism may need a certain environment in order to succeed, such as a job that requires negotiation skills and offers significant rewards, although their inclination to engage in political behavior can sometimes limit their potential. Employees who are high on narcissism may wreak organizational havoc by manipulating subordinates and harming the overall business because of their over-inflated perceptions of self. Higher levels of self-monitoring often lead to better performance but they may cause lower commitment to the organization. Risk-taking can be positive or negative; it may be great for someone who thrives on rapid decision-making, but it may prove stressful for someone who likes to weigh pros and cons carefully before making decisions. Type A individuals may achieve high performance but may risk doing so in a way that causes stress and conflict. Proactive personality, on the other hand, is usually associated with positive organizational performance.

Employee Values

Personal value systems are behind each employee’s attitudes and personality. Each employee enters an organization with an already established set of beliefs about what should be and what should not be. Today, researchers realize that personality and values are linked to organizations and organizational behavior. Years ago, only personality’s relation to organizations was of concern, but now managers are more interested in an employee’s flexibility to adapt to organizational change and to remain high in organizational commitment. Holland’s ( 1973 ) theory of personality-job fit describes six personality types (realistic, investigative, social, conventional, enterprising, and artistic) and theorizes that job satisfaction and turnover are determined by how well a person matches her or his personality to a job. In addition to person-job (P-J) fit, researchers have also argued for person-organization (P-O) fit, whereby employees desire to be a part of and are selected by an organization that matches their values. The Big Five would suggest, for example, that extraverted employees would desire to be in team environments; agreeable people would align well with supportive organizational cultures rather than more aggressive ones; and people high on openness would fit better in organizations that emphasize creativity and innovation (Anderson, Spataro, & Flynn, 2008 ).

Individual Differences, Affect, and Emotion

Personality predisposes people to have certain moods (feelings that tend to be less intense but longer lasting than emotions) and emotions (intense feelings directed at someone or something). In particular, personalities with extraversion and emotional stability partially determine an individual predisposition to experience emotion more or less intensely.

Affect is also related as describing the positive and negative feelings that people experience (Ashkanasy, 2003 ). Moreover, emotions, mood, and affect interrelate; a bad mood, for instance, can lead individuals to experience a negative emotion. Emotions are action-oriented while moods tend to be more cognitive. This is because emotions are caused by a specific event that might only last a few seconds, while moods are general and can last for hours or even days. One of the sources of emotions is personality. Dispositional or trait affects correlate, on the one hand, with personality and are what make an individual more likely to respond to a situation in a predictable way (Watson & Tellegen, 1985 ). Moreover, like personality, affective traits have proven to be stable over time and across settings (Diener, Larsen, Levine, & Emmons, 1985 ; Watson, 1988 ; Watson & Tellegen, 1985 ; Watson & Walker, 1996 ). State affect, on the other hand, is similar to mood and represents how an individual feels in the moment.

The Role of Affect in Organizational Behavior

For many years, affect and emotions were ignored in the field of OB despite being fundamental factors underlying employee behavior (Ashforth & Humphrey, 1995 ). OB researchers traditionally focused on solely decreasing the effects of strong negative emotions that were seen to impede individual, group, and organizational level productivity. More recent theories of OB focus, however, on affect, which is seen to have positive, as well as negative, effects on behavior, described by Barsade, Brief, and Spataro ( 2003 , p. 3) as the “affective revolution.” In particular, scholars now understand that emotions can be measured objectively and be observed through nonverbal displays such as facial expression and gestures, verbal displays, fMRI, and hormone levels (Ashkanasy, 2003 ; Rashotte, 2002 ).

Fritz, Sonnentag, Spector, and McInroe ( 2010 ) focus on the importance of stress recovery in affective experiences. In fact, an individual employee’s affective state is critical to OB, and today more attention is being focused on discrete affective states. Emotions like fear and sadness may be related to counterproductive work behaviors (Judge et al., 2006 ). Stress recovery is another factor that is essential for more positive moods leading to positive organizational outcomes. In a study, Fritz et al. ( 2010 ) looked at levels of psychological detachment of employees on weekends away from the workplace and how it was associated with higher wellbeing and affect.

Emotional Intelligence and Emotional Labor

Ashkanasy and Daus ( 2002 ) suggest that emotional intelligence is distinct but positively related to other types of intelligence like IQ. It is defined by Mayer and Salovey ( 1997 ) as the ability to perceive, assimilate, understand, and manage emotion in the self and others. As such, it is an individual difference and develops over a lifetime, but it can be improved with training. Boyatzis and McKee ( 2005 ) describe emotional intelligence further as a form of adaptive resilience, insofar as employees high in emotional intelligence tend to engage in positive coping mechanisms and take a generally positive outlook toward challenging work situations.

Emotional labor occurs when an employee expresses her or his emotions in a way that is consistent with an organization’s display rules, and usually means that the employee engages in either surface or deep acting (Hochschild, 1983 ). This is because the emotions an employee is expressing as part of their role at work may be different from the emotions they are actually feeling (Ozcelik, 2013 ). Emotional labor has implications for an employee’s mental and physical health and wellbeing. Moreover, because of the discrepancy between felt emotions (how an employee actually feels) and displayed emotions or surface acting (what the organization requires the employee to emotionally display), surface acting has been linked to negative organizational outcomes such as heightened emotional exhaustion and reduced commitment (Erickson & Wharton, 1997 ; Brotheridge & Grandey, 2002 ; Grandey, 2003 ; Groth, Hennig-Thurau, & Walsh, 2009 ).

Affect and Organizational Decision-Making

Ashkanasy and Ashton-James ( 2008 ) make the case that the moods and emotions managers experience in response to positive or negative workplace situations affect outcomes and behavior not only at the individual level, but also in terms of strategic decision-making processes at the organizational level. These authors focus on affective events theory (Weiss & Cropanzano, 1996 ), which holds that organizational events trigger affective responses in organizational members, which in turn affect organizational attitudes, cognition, and behavior.

Perceptions and Behavior

Like personality, emotions, moods, and attitudes, perceptions also influence employees’ behaviors in the workplace. Perception is the way in which people organize and interpret sensory cues in order to give meaning to their surroundings. It can be influenced by time, work setting, social setting, other contextual factors such as time of day, time of year, temperature, a target’s clothing or appearance, as well as personal trait dispositions, attitudes, and value systems. In fact, a person’s behavior is based on her or his perception of reality—not necessarily the same as actual reality. Perception greatly influences individual decision-making because individuals base their behaviors on their perceptions of reality. In this regard, attribution theory (Martinko, 1995 ) outlines how individuals judge others and is our attempt to conclude whether a person’s behavior is internally or externally caused.

Decision-Making and the Role of Perception

Decision-making occurs as a reaction to a problem when the individual perceives there to be discrepancy between the current state of affairs and the state s/he desires. As such, decisions are the choices individuals make from a set of alternative courses of action. Each individual interprets information in her or his own way and decides which information is relevant to weigh pros and cons of each decision and its alternatives to come to her or his perception of the best outcome. In other words, each of our unique perceptual processes influences the final outcome (Janis & Mann, 1977 ).

Common Biases in Decision-Making

Although there is no perfect model for approaching decision-making, there are nonetheless many biases that individuals can make themselves aware of in order to maximize their outcomes. First, overconfidence bias is an inclination to overestimate the correctness of a decision. Those most likely to commit this error tend to be people with weak intellectual and interpersonal abilities. Anchoring bias occurs when individuals focus on the first information they receive, failing to adjust for information received subsequently. Marketers tend to use anchors in order to make impressions on clients quickly and project their brand names. Confirmation bias occurs when individuals only use facts that support their decisions while discounting all contrary views. Lastly, availability bias occurs when individuals base their judgments on information readily available. For example, a manager might rate an employee on a performance appraisal based on behavior in the past few days, rather than the past six months or year.

Errors in Decision-Making

Other errors in decision-making include hindsight bias and escalation of commitment . Hindsight bias is a tendency to believe, incorrectly, after an outcome of an event has already happened, that the decision-maker would have accurately predicted that same outcome. Furthermore, this bias, despite its prevalence, is especially insidious because it inhibits the ability to learn from the past and take responsibility for mistakes. Escalation of commitment is an inclination to continue with a chosen course of action instead of listening to negative feedback regarding that choice. When individuals feel responsible for their actions and those consequences, they escalate commitment probably because they have invested so much into making that particular decision. One solution to escalating commitment is to seek a source of clear, less distorted feedback (Staw, 1981 ).

The last but certainly not least important individual level topic is motivation. Like each of the topics discussed so far, a worker’s motivation is also influenced by individual differences and situational context. Motivation can be defined as the processes that explain a person’s intensity, direction, and persistence toward reaching a goal. Work motivation has often been viewed as the set of energetic forces that determine the form, direction, intensity, and duration of behavior (Latham & Pinder, 2005 ). Motivation can be further described as the persistence toward a goal. In fact many non-academics would probably describe it as the extent to which a person wants and tries to do well at a particular task (Mitchell, 1982 ).

Early theories of motivation began with Maslow’s ( 1943 ) hierarchy of needs theory, which holds that each person has five needs in hierarchical order: physiological, safety, social, esteem, and self-actualization. These constitute the “lower-order” needs, while social and esteem needs are “higher-order” needs. Self-esteem for instance underlies motivation from the time of childhood. Another early theory is McGregor’s ( 1960 ) X-Y theory of motivation: Theory X is the concept whereby individuals must be pushed to work; and theory Y is positive, embodying the assumption that employees naturally like work and responsibility and can exercise self-direction.

Herzberg subsequently proposed the “two-factor theory” that attitude toward work can determine whether an employee succeeds or fails. Herzberg ( 1966 ) relates intrinsic factors, like advancement in a job, recognition, praise, and responsibility to increased job satisfaction, while extrinsic factors like the organizational climate, relationship with supervisor, and salary relate to job dissatisfaction. In other words, the hygiene factors are associated with the work context while the motivators are associated with the intrinsic factors associated with job motivation.

Contemporary Theories of Motivation

Although traditional theories of motivation still appear in OB textbooks, there is unfortunately little empirical data to support their validity. More contemporary theories of motivation, with more acceptable research validity, include self-determination theory , which holds that people prefer to have control over their actions. If a task an individual enjoyed now feels like a chore, then this will undermine motivation. Higher self-determined motivation (or intrinsically determined motivation) is correlated with increased wellbeing, job satisfaction, commitment, and decreased burnout and turnover intent. In this regard, Fernet, Gagne, and Austin ( 2010 ) found that work motivation relates to reactions to interpersonal relationships at work and organizational burnout. Thus, by supporting work self-determination, managers can help facilitate adaptive employee organizational behaviors while decreasing turnover intention (Richer, Blanchard, & Vallerand, 2002 ).

Core self-evaluation (CSE) theory is a relatively new concept that relates to self-confidence in general, such that people with higher CSE tend to be more committed to goals (Bono & Colbert, 2005 ). These core self-evaluations also extend to interpersonal relationships, as well as employee creativity. Employees with higher CSE are more likely to trust coworkers, which may also contribute to increased motivation for goal attainment (Johnson, Kristof-Brown, van Vianen, de Pater, & Klein, 2003 ). In general, employees with positive CSE tend to be more intrinsically motivated, thus additionally playing a role in increasing employee creativity (Judge, Bono, Erez, & Locke, 2005 ). Finally, according to research by Amabile ( 1996 ), intrinsic motivation or self-determined goal attainment is critical in facilitating employee creativity.

Goal-Setting and Conservation of Resources

While self-determination theory and CSE focus on the reward system behind motivation and employee work behaviors, Locke and Latham’s ( 1990 ) goal-setting theory specifically addresses the impact that goal specificity, challenge, and feedback has on motivation and performance. These authors posit that our performance is increased when specific and difficult goals are set, rather than ambiguous and general goals. Goal-setting seems to be an important motivational tool, but it is important that the employee has had a chance to take part in the goal-setting process so they are more likely to attain their goals and perform highly.

Related to goal-setting is Hobfoll’s ( 1989 ) conservation of resources (COR) theory, which holds that people have a basic motivation to obtain, maintain, and protect what they value (i.e., their resources). Additionally there is a global application of goal-setting theory for each of the motivation theories. Not enough research has been conducted regarding the value of goal-setting in global contexts, however, and because of this, goal-setting is not recommended without consideration of cultural and work-related differences (Konopaske & Ivancevich, 2004 ).

Self-Efficacy and Motivation

Other motivational theories include self-efficacy theory, and reinforcement, equity, and expectancy theories. Self-efficacy or social cognitive or learning theory is an individual’s belief that s/he can perform a task (Bandura, 1977 ). This theory complements goal-setting theory in that self-efficacy is higher when a manager assigns a difficult task because employees attribute the manager’s behavior to him or her thinking that the employee is capable; the employee in turn feels more confident and capable.

Reinforcement theory (Skinner, 1938 ) counters goal-setting theory insofar as it is a behaviorist approach rather than cognitive and is based in the notion that reinforcement conditions behavior, or in other words focuses on external causes rather than the value an individual attributes to goals. Furthermore, this theory instead emphasizes the behavior itself rather than what precedes the behavior. Additionally, managers may use operant conditioning, a part of behaviorism, to reinforce people to act in a desired way.

Social-learning theory (Bandura, 1977 ) extends operant conditioning and also acknowledges the influence of observational learning and perception, and the fact that people can learn and retain information by paying attention, observing, and modeling the desired behavior.

Equity theory (Adams, 1963 ) looks at how employees compare themselves to others and how that affects their motivation and in turn their organizational behaviors. Employees who perceive inequity for instance, will either change how much effort they are putting in (their inputs), change or distort their perceptions (either of self or others in relation to work), change their outcomes, turnover, or choose a different referent (acknowledge performance in relation to another employee but find someone else they can be better than).

Last but not least, Vroom’s ( 1964 ) expectancy theory holds that individuals are motivated by the extent to which they can see that their effort is likely to result in valued outcomes. This theory has received strong support in empirical research (see Van Erde & Thierry, 1996 , for meta-analytic results). Like each of the preceding theories, expectancy theory has important implications that managers should consider. For instance, managers should communicate with employees to determine their preferences to know what rewards to offer subordinates to elicit motivation. Managers can also make sure to identify and communicate clearly the level of performance they desire from an employee, as well as to establish attainable goals with the employee and to be very clear and precise about how and when performance will be rewarded (Konopaske & Ivancevich, 2004 ).

The Meso (Group) Level of Analysis

The second level of OB research also emerges from social and organizational psychology and relates to groups or teams. Topics covered so far include individual differences: diversity, personality and emotions, values and attitudes, motivation, and decision-making. Thus, in this section, attention turns to how individuals come together to form groups and teams, and begins laying the foundation for understanding the dynamics of group and team behavior. Topics at this level also include communication, leadership, power and politics, and conflict.

A group consists of two or more individuals who come together to achieve a similar goal. Groups can be formal or informal. A formal group on the one hand is assigned by the organization’s management and is a component of the organization’s structure. An informal group on the other hand is not determined by the organization and often forms in response to a need for social contact. Teams are formal groups that come together to meet a specific group goal.

Although groups are thought to go through five stages of development (Tuckman, 1965 : forming, storming, norming, performing, and adjourning) and to transition to effectiveness at the halfway mark (Gersick, 1988 ), group effectiveness is in fact far more complex. For example, two types of conformity to group norms are possible: compliance (just going along with the group’s norms but not accepting them) and personal acceptance (when group members’ individual beliefs match group norms). Behavior in groups then falls into required behavior usually defined by the formal group and emergent behavior that grows out of interactions among group members (Champoux, 2011 ).

Group Decision-Making

Although many of the decisions made in organizations occur in groups and teams, such decisions are not necessarily optimal. Groups may have more complex knowledge and increased perspectives than individuals but may suffer from conformity pressures or domination by one or two members. Group decision-making has the potential to be affected by groupthink or group shift. In groupthink , group pressures to conform to the group norms deter the group from thinking of alternative courses of action (Janis & Mann, 1977 ). In the past, researchers attempted to explain the effects of group discussion on decision-making through the following approaches: group decision rules, interpersonal comparisons, and informational influence. Myers and Lamm ( 1976 ), however, present a conceptual schema comprised of interpersonal comparisons and informational influence approaches that focus on attitude development in a more social context. They found that their research is consistent with the group polarization hypothesis: The initial majority predicts the consensus outcome 90% of the time. The term group polarization was founded in Serge Moscovici and his colleagues’ literature (e.g., Moscovici & Zavalloni, 1969 ). Polarization refers to an increase in the extremity of the average response of the subject population.

In other words, the Myer and Lamm ( 1976 ) schema is based on the idea that four elements feed into one another: social motivation, cognitive foundation, attitude change, and action commitment. Social motivation (comparing self with others in order to be perceived favorably) feeds into cognitive foundation , which in turn feeds into attitude change and action commitment . Managers of organizations can help reduce the negative phenomena and increase the likelihood of functional groups by encouraging brainstorming or openly looking at alternatives in the process of decision-making such as the nominal group technique (which involves restricting interpersonal communication in order to encourage free thinking and proceeding to a decision in a formal and systematic fashion such as voting).

Elements of Team Performance

OB researchers typically focus on team performance and especially the factors that make teams most effective. Researchers (e.g., see De Dreu & Van Vianen, 2001 ) have organized the critical components of effective teams into three main categories: context, composition, and process. Context refers to the team’s physical and psychological environment, and in particular the factors that enable a climate of trust. Composition refers to the means whereby the abilities of each individual member can best be most effectively marshaled. Process is maximized when members have a common goal or are able to reflect and adjust the team plan (for reflexivity, see West, 1996 ).

Communication

In order to build high-performing work teams, communication is critical, especially if team conflict is to be minimized. Communication serves four main functions: control, motivation, emotional expression, and information (Scott & Mitchell, 1976 ). The communication process involves the transfer of meaning from a sender to a receiver through formal channels established by an organization and informal channels, created spontaneously and emerging out of individual choice. Communication can flow downward from managers to subordinates, upward from subordinates to managers, or between members of the same group. Meaning can be transferred from one person to another orally, through writing, or nonverbally through facial expressions and body movement. In fact, body movement and body language may complicate verbal communication and add ambiguity to the situation as does physical distance between team members.

High-performance teams tend to have some of the following characteristics: interpersonal trust, psychological and physical safety, openness to challenges and ideas, an ability to listen to other points of view, and an ability to share knowledge readily to reduce task ambiguity (Castka, Bamber, Sharp, & Belohoubek, 2001 ). Although the development of communication competence is essential for a work team to become high-performing, that communication competence is also influenced by gender, personality, ability, and emotional intelligence of the members. Ironically, it is the self-reliant team members who are often able to develop this communication competence. Although capable of working autonomously, self-reliant team members know when to ask for support from others and act interdependently.

Emotions also play a part in communicating a message or attitude to other team members. Emotional contagion, for instance, is a fascinating effect of emotions on nonverbal communication, and it is the subconscious process of sharing another person’s emotions by mimicking that team member’s nonverbal behavior (Hatfield, Cacioppo, & Rapson, 1993 ). Importantly, positive communication, expressions, and support of team members distinguished high-performing teams from low-performing ones (Bakker & Schaufeli, 2008 ).

Team Conflict

Because of member interdependence, teams are inclined to more conflict than individual workers. In particular, diversity in individual differences leads to conflict (Thomas, 1992 ; Wall & Callister, 1995 ; see also Cohen & Bailey, 1997 ). Jehn ( 1997 ) identifies three types of conflict: task, relationship, and process. Process conflict concerns how task accomplishment should proceed and who is responsible for what; task conflict focuses on the actual content and goals of the work (Robbins et al., 2014 ); and relationship conflict is based on differences in interpersonal relationships. While conflict, and especially task conflict, does have some positive benefits such as greater innovation (Tjosvold, 1997 ), it can also lead to lowered team performance and decreased job satisfaction, or even turnover. De Dreu and Van Vianen ( 2001 ) found that team conflict can result in one of three responses: (1) collaborating with others to find an acceptable solution; (2) contending and pushing one member’s perspective on others; or (3) avoiding and ignoring the problem.

Team Effectiveness and Relationship Conflict

Team effectiveness can suffer in particular from relationship conflict, which may threaten team members’ personal identities and self-esteem (Pelled, 1995 ). In this regard, Murnighan and Conlon ( 1991 ) studied members of British string quartets and found that the most successful teams avoided relationship conflict while collaborating to resolve task conflicts. This may be because relationship conflict distracts team members from the task, reducing team performance and functioning. As noted earlier, positive affect is associated with collaboration, cooperation, and problem resolution, while negative affect tends to be associated with competitive behaviors, especially during conflict (Rhoades, Arnold, & Jay, 2001 ).

Team Climate and Emotionality

Emotional climate is now recognized as important to team processes (Ashkanasy & Härtel, 2014 ), and team climate in general has important implications for how individuals behave individually and collectively to effect organizational outcomes. This idea is consistent with Druskat and Wolff’s ( 2001 ) notion that team emotional-intelligence climate can help a team manage both types of conflict (task and relationship). In Jehn’s ( 1997 ) study, she found that emotion was most often negative during team conflict, and this had a negative effect on performance and satisfaction regardless of the type of conflict team members were experiencing. High emotionality, as Jehn calls it, causes team members to lose sight of the work task and focus instead on the negative affect. Jehn noted, however, that absence of group conflict might also may block innovative ideas and stifle creativity (Jehn, 1997 ).

Power and Politics

Power and organizational politics can trigger employee conflict, thus affecting employee wellbeing, job satisfaction, and performance, in turn affecting team and organizational productivity (Vigoda, 2000 ). Because power is a function of dependency, it can often lead to unethical behavior and thus become a source of conflict. Types of power include formal and personal power. Formal power embodies coercive, reward, and legitimate power. Coercive power depends on fear. Reward power is the opposite and occurs when an individual complies because s/he receives positive benefits from acting in accordance with the person in power. In formal groups and organizations, the most easily accessed form of power is legitimate because this form comes to be from one’s position in the organizational hierarchy (Raven, 1993 ). Power tactics represent the means by which those in a position of power translate their power base (formal or personal) into specific actions.

The nine influence tactics that managers use according to Yukl and Tracey ( 1992 ) are (1) rational persuasion, (2) inspirational appeal, (3) consultation, (4) ingratiation, (5) exchange, (6) personal appeal, (7) coalition, (8) legitimating, and (9) pressure. Of these tactics, inspirational appeal, consultation, and rational persuasion were among the strategies most effective in influencing task commitment. In this study, there was also a correlation found between a manager’s rational persuasion and a subordinate rating her effectively. Perhaps this is because persuasion requires some level of expertise, although more research is needed to verify which methods are most successful. Moreover, resource dependence theory dominates much theorizing about power and organizational politics. In fact, it is one of the central themes of Pfeffer and Salancik’s ( 1973 ) treatise on the external control of organizations. First, the theory emphasizes the importance of the organizational environment in understanding the context of how decisions of power are made (see also Pfeffer & Leblebici, 1973 ). Resource dependence theory is based on the premise that some organizations have more power than others, occasioned by specifics regarding their interdependence. Pfeffer and Salancik further propose that external interdependence and internal organizational processes are related and that this relationship is mediated by power.

Organizational Politics

Political skill is the ability to use power tactics to influence others to enhance an individual’s personal objectives. In addition, a politically skilled person is able to influence another person without being detected (one reason why he or she is effective). Persons exerting political skill leave a sense of trust and sincerity with the people they interact with. An individual possessing a high level of political skill must understand the organizational culture they are exerting influence within in order to make an impression on his or her target. While some researchers suggest political behavior is a critical way to understand behavior that occurs in organizations, others simply see it as a necessary evil of work life (Champoux, 2011 ). Political behavior focuses on using power to reach a result and can be viewed as unofficial and unsanctioned behavior (Mintzberg, 1985 ). Unlike other organizational processes, political behavior involves both power and influence (Mayes & Allen, 1977 ). Moreover, because political behavior involves the use of power to influence others, it can often result in conflict.

Organizational Politics, Power, and Ethics

In concluding this section on power and politics, it is also appropriate to address the dark side, where organizational members who are persuasive and powerful enough might become prone to abuse standards of equity and justice and thereby engage in unethical behavior. An employee who takes advantage of her position of power may use deception, lying, or intimidation to advance her own interests (Champoux, 2011 ). When exploring interpersonal injustice, it is important to consider the intent of the perpetrator, as well as the effect of the perpetrator’s treatment from the victim’s point of view. Umphress, Simmons, Folger, Ren, and Bobocel ( 2013 ) found in this regard that not only does injustice perceived by the self or coworkers influence attitudes and behavior within organizations, but injustice also influences observer reactions both inside and outside of the organization.

Leadership plays an integrative part in understanding group behavior, because the leader is engaged in directing individuals toward attitudes and behaviors, hopefully also in the direction of those group members’ goals. Although there is no set of universal leadership traits, extraversion from the Big Five personality framework has been shown in meta-analytic studies to be positively correlated with transformational, while neuroticism appears to be negatively correlated (Bono & Judge, 2004 ). There are also various perspectives to leadership, including the competency perspective, which addresses the personality traits of leaders; the behavioral perspective, which addresses leader behaviors, specifically task versus people-oriented leadership; and the contingency perspective, which is based on the idea that leadership involves an interaction of personal traits and situational factors. Fiedler’s ( 1967 ) contingency, for example, suggests that leader effectiveness depends on the person’s natural fit to the situation and the leader’s score on a “least preferred coworker” scale.

More recently identified styles of leadership include transformational leadership (Bass, Avolio, & Atwater, 1996 ), charismatic leadership (Conger & Kanungo, 1988 ), and authentic leadership (Luthans & Avolio, 2003 ). In a nutshell, transformational leaders inspire followers to act based on the good of the organization; charismatic leaders project a vision and convey a new set of values; and authentic leaders convey trust and genuine sentiment.

Leader-member exchange theory (LMX; see Graen & Uhl-Bien, 1995 ) assumes that leadership emerges from exchange relationships between a leader and her or his followers. More recently, Tse, Troth, and Ashkanasy ( 2015 ) expanded on LMX to include social processes (e.g., emotional intelligence, emotional labor, and discrete emotions), arguing that affect plays a large part in the leader-member relationship.

Leadership Development

An emerging new topic in leadership concerns leadership development, which embodies the readiness of leadership aspirants to change (Hannah & Avolio, 2010 ). In this regard, the learning literature suggests that intrinsic motivation is necessary in order to engage in development (see Hidi & Harackiewicz, 2000 ), but also that the individual needs to be goal-oriented and have developmental efficacy or self-confidence that s/he can successfully perform in leadership contexts.

Ashkanasy, Dasborough, and Ascough ( 2009 ) argue further that developing the affective side of leaders is important. In this case, because emotions are so pervasive within organizations, it is important that leaders learn how to manage them in order to improve team performance and interactions with employees that affect attitudes and behavior at almost every organizational level.

Abusive Leadership

Leaders, or those in positions of power, are particularly more likely to run into ethical issues, and only more recently have organizational behavior researchers considered the ethical implications of leadership. As Gallagher, Mazur, and Ashkanasy ( 2015 ) describe, since 2009 , organizations have been under increasing pressure to cut costs or “do more with less,” and this sometimes can lead to abusive supervision, whereby employee job demands exceed employee resources, and supervisors engage in bullying, undermining, victimization, or personal attacks on subordinates (Tepper, 2000 ).

Supervisors who are very high or low in emotional intelligence may be more likely to experience stress associated with a very demanding high-performance organizational culture. These supervisors may be more likely to try to meet the high demands and pressures through manipulative behaviors (Kilduff, Chiaburu, & Menges, 2010 ). This has serious implications for employee wellbeing and the organization as a whole. Abusive supervision detracts from the ability for those under attack to perform effectively, and targets often come to doubt their own ability to perform (Tepper, 2000 ).

The Macro (Organizational) Level of Analysis

The final level of OB derives from research traditions across three disciplines: organizational psychology, organizational sociology, and organizational anthropology. Moreover, just as teams and groups are more than the sum of their individual team members, organizations are also more than the sum of the teams or groups residing within them. As such, structure, climate, and culture play key roles in shaping and being shaped by employee attitudes and behaviors, and they ultimately determine organizational performance and productivity.

Organizational Structure

Organizational structure is a sociological phenomenon that determines the way tasks are formally divided and coordinated within an organization. In this regard, jobs are often grouped by the similarity of functions performed, the product or service produced, or the geographical location. Often, the number of forms of departmentalization will depend on the size of the organization, with larger organizations having more forms of departmentalization than others. Organizations are also organized by the chain of command or the hierarchy of authority that determines the span of control, or how many employees a manager can efficiently and effectively lead. With efforts to reduce costs since the global financial crisis of 2009 , organizations have tended to adopt a wider, flatter span of control, where more employees report to one supervisor.

Organizational structure also concerns the level of centralization or decentralization, the degree to which decision-making is focused at a single point within an organization. Formalization is also the degree to which jobs are organized in an organization. These levels are determined by the organization and also vary greatly across the world. For example, Finnish organizations tend to be more decentralized than their Australian counterparts and, as a consequence, are more innovative (Leiponen & Helfat, 2011 ).

Mintzberg ( 1979 ) was the first to set out a taxonomy of organizational structure. Within his model, the most common organizational design is the simple structure characterized by a low level of departmentalization, a wide span of control, and centralized authority. Other organizational types emerge in larger organizations, which tend to be bureaucratic and more routinized. Rules are formalized, tasks are grouped into departments, authority is centralized, and the chain of command involves narrow spans of control and decision-making. An alternative is the matrix structure, often found in hospitals, universities, and government agencies. This form of organization combines functional and product departmentalization where employees answer to two bosses: functional department managers and product managers.

New design options include the virtual organization and the boundaryless organization , an organization that has no chain of command and limitless spans of control. Structures differ based on whether the organization seeks to use an innovation strategy, imitation strategy, or cost-minimization strategy (Galunic & Eisenhardt, 1994 ). Organizational structure can have a significant effect on employee attitudes and behavior. Evidence generally shows that work specialization leads to higher employee productivity but also lower job satisfaction (Porter & Lawler, 1965 ). Gagné and Deci emphasize that autonomous work motivation (i.e., intrinsic motivation and integrated extrinsic motivation) is promoted in work climates that are interesting, challenging, and allow choice. Parker, Wall, and Jackson ( 1997 ) specifically relate job enlargement to autonomous motivation. Job enlargement was first discussed by management theorists like Lawler and Hall ( 1970 ), who believed that jobs should be enlarged to improve the intrinsic motivation of workers. Today, most of the job-design literature is built around the issue of work specialization (job enlargement and enrichment). In Parker, Wall, and Jackson’s study, they observed that horizontally enlarging jobs through team-based assembly cells led to greater understanding and acceptance of the company’s vision and more engagement in new work roles. (In sum, by structuring work to allow more autonomy among employees and identification among individual work groups, employees stand to gain more internal autonomous motivation leading to improved work outcomes (van Knippenberg & van Schie, 2000 ).

The Physical Environment of Work

Ashkanasy, Ayoko, and Jehn ( 2014 ) extend the topic of organizational structure to discuss, from a psychological perspective, how the physical work environment shapes employee attitudes, behaviors, and organizational outcomes. Elsbach ( 2003 ) pointed out that the space within which employees conduct their work is critical to employees’ levels of performance and productivity. In their study, Ashkanasy and his colleagues looked at the underlying processes influencing how the physical environment determines employee attitudes and behaviors, in turn affecting productivity levels. They base their model on affective events theory (Weiss & Cropanzano, 1996 ), which holds that particular “affective” events in the work environment are likely to be the immediate cause of employee behavior and performance in organizations (see also Ashkanasy & Humphrey, 2011 ). Specifically, Ashkanasy and colleagues ( 2014 ) looked at how this theory holds in extremely crowded open-plan office designs and how employees in these offices are more likely to experience negative affect, conflict, and territoriality, negatively impacting attitudes, behaviors, and work performance.

Organizational Climate and Culture

Although organizational structure and the physical environment are important determinants of employee attitudes and behaviors, organizational culture and climate lie at the heart of organizational interactions (Ashkanasy & Jackson, 2001 ). Organizational culture derives from an anthropological research tradition, while organizational climate is based on organizational psychology.

A central presumption of culture is that, as Smircich ( 1983 ) noted, organizational behavior is not a function of what goes on inside individual employees’ heads, but between employees, as evidenced in daily organizational communication and language. As such, organizational culture allows one organization to distinguish itself from another, while conveying a sense of identity for its members.

Organizational Climate and its Relation to Organizational Culture

Organizational culture creates organizational climate or employees’ shared perceptions about their organization and work environment. Organizational climate has been found to facilitate and/or inhibit displays of certain behaviors in one study (Smith-Crowe, Burke, & Landis, 2003 ), and overall, organizational climate is often viewed as a surface-level indicator of the functioning of the employee/organizational environment relationship (Ryan, Horvath, Ployhart, Schmitt, & Slade, 2000 ). For instance, a more restrictive climate may inhibit individual decision-making in contrast to a more supportive climate in which the organization may intervene at the individual level and in which the ability/job performance relationship is supported (James, Demaree, Mulaik, & Ladd, 1992 ). In a study focused on safety climate, Smith-Crowe and colleagues found that organizational climate is essential in determining whether training will transfer to employee performance, and this is most likely because organizational climate moderates the knowledge/performance relationship. Gibbs and Cooper ( 2010 ) also found that a supportive organizational climate is positively related to employee performance. They specifically looked at PsyCap, the higher-order construct of psychological capital first proposed by Luthans and Youssef ( 2004 ).

Organizational Change

The final topic covered in this article is organizational change. Organizational culture and climate can both be negatively impacted by organizational change and, in turn, negatively affect employee wellbeing, attitudes, and performance, reflecting onto organizational performance. Often, there is great resistance to change, and the success rate of organizational change initiatives averages at less than 30% (Al-Haddad & Kotnour, 2015 ). In order to overcome this resistance, it is important that managers plan ahead for changes and emphasize education and communication about them. As organizations becoming increasingly globalized, change has become the norm, and this will continue into the future.

Additionally, as organizations become increasingly globalized, organizational changes often involve mergers that have important organizational implications. In this regard, Kavanagh and Ashkanasy ( 2006 ) found that, for a merger to be successful, there needs to be alignment between the individual values and organizational cultures of merging partners. Managers during a merger situation need to be especially cognizant of how this organizational change affects the company’s original organizational culture.

Organizational development (OD), a collection of planned change interventions, may be the way to improve organizational performance and increase employee wellbeing. OD focuses on employees respecting one another, trust and support, equal power, confrontation of problems, and participation of everyone affected by the organizational change (Lines, 2004 ). Moreover, when an organization already has an established climate and culture that support change and innovation, an organization may have less trouble adapting to the change.

Organizational change research encompasses almost all aspects of organizational behavior. Individuals and employees are motivated to achieve success and be perceived as successful. In this regard, each of the individual differences—personality, affect, past experiences, values, and perceptions—plays into whether individuals can transcend obstacles and deal with the barriers encountered along the journey toward achievement. Teams are similarly motivated to be successful in a collective sense and to prove that they contribute to the organization as a whole. In addition to individual differences, team members deal with bringing all those individual differences together, which can wreak havoc on team communication and cause further obstacles in terms of power differences and conflicts in regard to decision-making processes. Last, at the organizational level of organizational behavior, it is important to account for all of these micro- and meso-level differences, and to address the complexity of economic pressures, increasing globalization, and global and transnational organizations to the mix. This is at the top level of sophistication because, as emphasized before, just as groups equal much more than the sum of individual members, organizations are much more than the sum of their teams. The organizational structure, the formal organization, the organizational culture, and climate and organizational rules all impact whether an organization can perform effectively. Organizational behavior, through its complex study of human behavior at its very conception, offers much-needed practical implications for managers in understanding people at work.

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Organizational Sensemaking
Human Resource Management and Organizational Psychology
Overqualification in the Workplace
Communication and Intergroup Relations
Justice in Teams
Training from an Organizational Psychology Perspective
Dual Process Models of Persuasion

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Build a Culture That Aligns with People’s Values

Natalie Baumgartner

case study on values in organisational behaviour

It’ll improve retention and recruitment efforts.

Candidates are seeking workplaces where they can intertwine their beliefs with those of the company, and work together on a common vision of purpose and success. As leaders grapple with how to recruit top candidates and retain employees, they must rethink how they’re shaping and building a culture that unites people around a common cause. Great culture should provide continuous alignment to the vision, purpose, and goals of the organization. Today’s workforce wants to know that they’re making a difference within their companies. While work cultures are unique to every organization, the foundation of what enables a culture to thrive is the extent to which employees are empowered to be engaged, feel valued, and be heard. At a time when companies are making headlines for culture failures or scandals, employers must evaluate whether their own organizational culture is empowering employees to live by shared values – or to compromise them.

NB Natalie Baumgartner is the Chief Workforce Scientist at Achievers , an employee-engagement platform. She’s a thought leader, advisor and speaker on corporate culture, employee experience and organizational transformation.

Partner Center

2.6 Personal Values and Ethics

What is the role of ethical behavior in managerial actions?

A factor that has surprised many business leaders is the alarming rise in accusations of unethical or disreputable behavior in today’s companies. We hear with increasing regularity of stock market manipulations, disregard of environmental hazards, bribes, and kickbacks. To understand these behaviors, we must examine the role of values and personal ethics in the workplace. We begin with the concept of values.

A value may be defined as “an enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence.” 23 In other words, a value represents a judgment by an individual that certain things are “good” or “bad,” “important” or “unimportant,” and so forth. As such, values serve a useful function in providing guidelines or standards for choosing one’s own behavior and for evaluating the behavior of others.

Characteristics of Values

The values people have tend to be relatively stable over time. The reason for this lies in the manner in which values are acquired in the first place. That is, when we first learn a value (usually at a young age), we are taught that such-and-such behavior is always good or always bad. For instance, we may be taught that lying or stealing is always unacceptable. Few people are taught that such behavior is acceptable in some circumstances but not in others. Hence, this definitive quality of learned values tends to secure them firmly in our belief systems. This is not to say that values do not change over time. As we grow, we are increasingly confronted with new and often conflicting situations. Often, it is necessary for us to weigh the relative merits of each and choose a course of action. Consider, for example, the worker who has a strong belief in hard work but who is pressured by her colleagues not to outperform the group. What would you do in this situation?

Rokeach has identified two fundamental types of values: instrumental and terminal. 24 Instrumental values represent those values concerning the way we approach end-states. That is, do we believe in ambition, cleanliness, honesty, or obedience? What factors guide your everyday behavior? Terminal values , on the other hand, are those end-state goals that we prize. Included here are such things as a comfortable life, a sense of accomplishment, equality among all people, and so forth. Both sets of values have significant influence on everyday behavior at work.

You can assess your own instrumental and terminal values by completing the self-assessment in the end-of-chapter assignments. Simply rank-order the two lists of values, and then refer to the reference for scoring procedures.

Role of Values and Ethics in Organizations

Personal values represent an important force in organizational behavior for several reasons. In fact, at least three purposes are served by the existence of personal values in organizations: (1) values serve as standards of behavior for determining a correct course of action; (2) values serve as guidelines for decision-making and conflict resolution; and (3) values serve as an influence on employee motivation. Let us consider each of these functions.

Standards of Behavior. First, values help us determine appropriate standards of behavior. They place limits on our behavior both inside and outside the organization. In such situations, we are referring to what is called ethical behavior , or ethics . Employees at all levels of the organization have to make decisions concerning what to them is right or wrong, proper or improper. For example, would you conceal information about a hazardous product made by your company, or would you feel obliged to tell someone? How would you respond to petty theft on the part of a supervisor or coworker in the office? To some extent, ethical behavior is influenced by societal values. Societal norms tell us it is wrong to engage in certain behaviors. In addition, however, individuals must often determine for themselves what is proper and what is not. This is particularly true when people find themselves in “gray zones”—situations where ethical standards are ambiguous or unclear. In many situations, a particular act may not be illegal. Moreover, one’s colleagues and friends may disagree about what is proper. In such circumstances, people have to determine their own standards of behavior.

Expanding Around the Globe

Two cultures’ perspectives of straight talk.

Yukiko Tanabe, a foreign exchange student from Tokyo, Japan, was both eager and anxious about making new friends during her one-year study abroad in the United States. After a month-long intensive course in English over the summer, she began her studies at the University of California. Yukiko was in the same psychology class as Jane McWilliams. Despite Yukiko’s somewhat shy personality, it did not take long before she and Jane were talking before and after class and studying together.

Part of the way through the term, the professor asked for volunteers to be part of an experiment on personalities and problem-solving. The professor also offered extra credit for participation in the experiment and asked interested students to stay after class to discuss the project in more detail.

When class was over, Jane asked Yukiko if she wanted to stay after and learn more about the project and the extra credit. Yukiko hesitated and then said that she was not sure. Jane replied that it would only take a few minutes to listen to the explanation, and so the two young women went up to the front of the class, along with about 20 other students, to hear the details.

The project would simply involve completing a personality questionnaire and then attempting to solve three short case problems. In total, it would take about one hour of time and would be worth 5 percent extra credit. Jane though it was a great idea and asked Yukiko if she wanted to participate. Yukiko replied that she was not sure. Jane responded that they could go together, that it would be fun, and that 5 percent extra credit was a nice bonus. To this Yukiko made no reply, so Jane signed both of them up for the project and suggested that they meet at the quad about 10 minutes before the scheduled beginning of the experiment.

On the day of the experiment, however, Yukiko did not show up. Jane found out later from Yukiko that she did not want to participate in the experiment. “Then why didn’t you just say so?” asked Jane. “Because I did not want to embarrass you in front of all your other friends by saying no,” explained Yukiko.

Source: Personal communication by the author. Names have been disguised.

Guidelines for Decision-Making and Conflict Resolution. In addition, values serve as guidelines for making decisions and for attempting to resolve conflicts. Managers who value personal integrity are less likely to make decisions they know to be injurious to someone else. Relatedly, values can influence how someone approaches a conflict. For example, if your boss asks your opinion about a report she wrote that you don’t like, do you express your opinion candidly or be polite and flatter her?

An interesting development in the area of values and decision-making involves integrity or honesty tests. These tests are designed to measure an individual’s level of integrity or honesty based on the notion that honest or dishonest behavior and decisions flow from a person’s underlying values. Today over 5,000 firms use these tests, some of which use direct questions and some of which use camouflaged questions. Although the reliability of the most common tests seem good, their validity (i.e., the extent to which they can accurately predict dishonest behavior) is more open to question. 25 Nevertheless, because they do not cost much and are less intrusive than drug or polygraph testing, integrity tests are increasingly used to screen potential employees.

Influence on Motivation. Values affect employee motivation by determining what rewards or outcomes are sought. Employees are often offered overtime work and the opportunity to make more money at the expense of free time and time with their families. Which would you choose? Would you work harder to get a promotion to a perhaps more stressful job or “lay back” and accept a slower and possibly less rewarding career path? Value questions such as these confront employees and managers every day.

Prominent among work-related values is the concept of the work ethic . Simply put, the work ethic refers to the strength of one’s commitment and dedication to hard work, both as an end in itself and as a means to future rewards. Much has been written lately concerning the relative state of the work ethic in North America. It has been repeatedly pointed out that one reason for our trouble in international competition lies in our rather mediocre work ethic. This is not to say that many Americans do not work hard; rather, it is to say that others (most notably those in East Asia) simply work harder.

There are many ways to assess these differences, but perhaps the simplest way is to look at actual hours worked on average in different countries both in Asia and Western Europe. Looking at Table 2.3 , you may be surprised to discover that although the average American works 1,789 hours (and takes an average of 19.5 vacation days) per year, the average South Korean works 2,070 hours per year (and takes only 4.5 days of vacation)! 26 The typical Japanese worker works 1,742 hours per year and takes 9.6 days of vacation. Meanwhile, Western Europeans work fewer hours and take more vacation days. Thus, although Americans may work longer hours than many Europeans, they fall far behind many in East Asia.

Average Hours Worked and Vacation Taken per Worker
Country	Average Hours Worked per Year	Vacation Days Actually Taken
South Korea	2,070	4.5
United States	1,789	19.5
Japan	1,742	9.6
United Kingdom	1,676	22.5
Germany	1,288	30.2
France	1,472	25.0
Adapted from OECD.Stat, “Average annual hours actually worked per worker,” accessed July 20, 2018, https://stats.oecd.org/Index.aspx?DataSetCode=ANHRS; and Richard M. Steers, Yoo Keun Shin, and Gerardo R. Ungson, (Philadelphia: Ballinger, 1989).

Example: A Country Tries to Reduce Its Workweek

What does a country do when its people are overmotivated? Consider the case of Japan. On the basis of Japan’s newfound affluence and success in the international marketplace, many companies—and the government—are beginning to be concerned that perhaps Japanese employees work too hard and should slow down. They may be too motivated for their own good. As a result, the Japanese Department of Labor has initiated a drive to shorten the workweek and encourage more Japanese employees to take longer holidays. The effort is focusing on middle-aged and older employees, because their physical stamina may be less than that of their more junior colleagues. Many companies are following this lead and are beginning to reduce the workweek. This is no easy task in a land where such behavior may be seen by employees as showing disloyalty toward the company. It requires a fundamental change in employee attitudes.

At the same time, among younger employees, cracks are beginning to appear in the fabled Japanese work ethic. Younger workers are beginning to express increased frustration with dull jobs and routine assignments, and job satisfaction appears to be at an all-time low. Young Japanese are beginning to take longer lunch periods and look forward to Friday and the coming weekend. Whether this is attributable to increasing affluence in a changing society or simply the emergence of a new generation, things are changing—however slowly—in the East. 27

Concept Check

What role do managers undertake to ensure an environment where ethics and values are followed?

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Understanding Values in Organisational Behaviour

Table of Contents

Values are a core aspect of human behavior that shape an individual’s beliefs, attitudes, and actions both within and outside the workplace. In Organisational Behaviour (OB), understanding values is essential for managers and organizations as they significantly influence employee motivation, decision-making, and organizational culture. In this blog, we will explore the concept of values, their formation, importance, and their implications in the organizational context.

What are Values?

Values are enduring beliefs and principles that guide individuals’ preferences, attitudes, and behavior. They represent what is considered important, desirable, and morally right by an individual or a group. Values form the foundation of an individual’s identity and are deeply ingrained in their personality.

Formation of Values

Values are shaped by a combination of factors, including:

Family and Upbringing: Family plays a vital role in instilling values during early childhood. Cultural and societal norms passed down through generations influence individual values.
Education and Socialization: Education and socialization within communities and institutions contribute to the development of values. Schools, religious institutions, and peer groups play a role in shaping values.
Personal Experiences: Life experiences, particularly significant events and interactions, can impact an individual’s values and perspectives.
Media and Influences: Media, including television, movies, and social media, can influence values by presenting certain ideas and narratives.

Importance of Values in the Workplace

Values are of utmost importance in the workplace, as they influence several critical aspects:

Employee Motivation: Aligning individual values with organizational values enhances employee motivation. When employees believe in the organization’s mission and values, they are more likely to be engaged and committed.
Ethical Decision-Making: Values guide ethical decision-making in the workplace. Individuals with strong ethical values are more likely to make decisions that align with moral principles and the organization’s code of conduct.
Organizational Culture: Values collectively shape the organizational culture. An organization with shared values fosters a positive work environment and a sense of belonging among employees.
Employee-Organization Fit: Employees whose personal values align with the organization’s values are more likely to fit well into the organizational culture and be satisfied with their job.

Managing Values in Organizations

To effectively manage values in organizations, managers can:

Promote Core Values: Clearly communicate and promote the organization’s core values to employees at all levels.
Lead by Example: Leaders should embody the organization’s values and demonstrate ethical behavior.
Value-Based Recruitment: Consider values alignment during the recruitment process to ensure employees fit well within the organizational culture.
Values Training and Development: Provide training and development opportunities that reinforce and strengthen shared values.
Recognition and Rewards: Recognize and reward employees who exemplify the organization’s values.

Values are an integral part of human behavior, influencing individual beliefs, attitudes, and actions both in personal and professional spheres. In the workplace, values play a critical role in employee motivation, ethical decision-making, organizational culture, and employee-organization fit. Managers who understand the importance of values can create a positive work environment, foster employee engagement, and promote a culture aligned with the organization’s mission and values.

By upholding shared values, organizations can build a strong foundation for success, enhance employee satisfaction, and achieve their strategic objectives.

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Social Processes and Behavioural Issues

1 Concept of Organizational Behaviour

The Open System and Institutional Perspectives of Society and Organisation
The Society-Environment-Organisation Interface
Social Processes as Sources of Human Behaviour
Process Levels from Individual (Micro) Level to Society (Macro) Level
Changing Society and Organisations in India

2 Approaches to Organizational Behaviour

Meaning of and Approaches to Organisational Behaviour (OB)
OB Components and Models
Systems View of OB
Components of Formal Organisation System
Managing Organisational Behaviour

3 Evolution of Organizational Behaviour

The Classical movement
Social Man Theory
Behavioural Movement
Human Relations Movement
Neo-Human Relations
Behavioral Science Theorists

4 Personality, Values and Attitudes

Models to Understand Human Behaviour
Implications for the Organisation
Personality
Determinants of Personality
Type and Trait Approaches to Personality
Theories of Personality
Impact of Personality Traits on Organisational Behaviour
Importance of Personality
Attitudes and Organisation
Socialisation’s Influence on Personality, Values and Attitudes
Schein Socialisation Model

5 Learning and Behaviour Modification

Concept and Definition
Theories of Learning
Reinforcement and Learning
Role and Methods of Reinforcement
Organisational Learning
Learning Organisation
Behaviour Modification
Behaviour Modification Process
Organisational Behaviour Modification (OBM)

6 Perception and Attribution

Definition and Nature of Perception
Basic Elements in Perceptual Process
Factors Influencing Perception
Perceptual Organisation
Social Perception
Impression Management
Attribution
Perception: Errors and Remedies
Perception and its Application in Organisations

7 Motivation

Motivation: Evolution of the Concept
Types of Motivation
Motivation and Morale
Motivating employees in actual practice
Motives and Managerial Behaviour

8 Group Dynamics and Team Building

The Concept and Nature of Group
Stages of Group Development
Determinants of Group Productivity
Teams: Nature and Types
Effective Team Building
Problems Affecting Teamwork

9 Conflict and Negotiation Strategies

Defining Conflict
Conflict: Types and Levels
Sources of conflict
Effects of Conflict
Conflict Process
Conflict Management
Conflict Prevention
Negotiation
The process of negotiation
Types of Bargaining Strategies
Individual Differences in Negotiation Effectiveness
Situational Factor of negotiation
Ethics and Negotiation
Third Party negotiations
The Gandhian Approach to conflict resolution and integration
Avoiding common mistakes in negotiation

10 Job Stress

What is Stress?
Understanding stress in organisations
Types of Stress
Knowing Stress Management Techniques
Burnout and Rustout
Coping with Stress

11 Employee Empowerment

Concept and Theory of Employee Empowerment
Management’s Role in Empowerment
Measuring Empowerment
Pros & Cons of Empowerment in an Organization

12 Organization Citizenship Behaviour

Concept of OCB
Evolution of OCB Concept
Forms and Dimensions of OCB
Antecedents of OCB
Implications of OCB
OCB in Practice
Measuring OCB
OCB: Potential Pitfalls

13 Organisational Inclusiveness

Inclusion of People with Disabilities
Gender Diversity
Transgender and LGBT Inclusion

14 Diversity Management

Meaning of Diversity Management
Need for Diversity in Organisation
Levels of Diversity
Discrimination
Biographical Characteristics
What is Diversity at Workplace?
The Reason Behind Rise of Diversity
Diversity is a Threat or an Opportunity?
Implementing Diversity Management Strategy
Diversity Case Study

15 Positive Approaches to Work Behaviour

Optimism in Workplace
Happiness Objective or Subjective
Spiritual Intelligence (SQ) at Workplace
Concept of SQ
Organizational Spirituality
Contribution of Spiritual Intelligence to Managerial Leadership
Emotional Intelligence
Models of Emotional Intelligence
Applications of Emotional Intelligence

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Dr. Pooja Mehta

Learning Outcome

2. Introduction

3. Meaning and Definitions of values

4. Characteristics of values

5. Importance of values

6. Types of values

7. Effects of values

8. Sources of values

9. Values across cultures

10. Values and OB

11. Summary

1. Learning Outcome:

After completing this module the students will be able to: Understand the concept of values.
Comprehend the classification of values
Illustrate the effects of values
Describe various sources of values

2. Introduction

3. Meaning and Definitions of Values

Values can be described as the basic convictions that guide an individual that a particular mode of conduct or final outcome is personally or socially acceptable or not. Once values are internalised, they become standard for guiding the actions or decision making of an individual. Values contain an element of judgement which influences an individual’s understanding about what is good or bad, desirable or undesirable. Values are inherited as well as learnt through the process of socialisation. The work related values such as autonomy, comfort, achievement and status seem to be inherited. Certain individual values are also learnt in different stages of life as a result of interaction with relevant persons in our life like our parents, friends, teachers and colleagues etc. Values are comprised of both content and intensity attributes. Content attributes define that a mode of conduct or final outcome is important and the intensity attribute define how much important it is for an individual.

Value can be defined as a, “Concept of the desirable, an internalised criterion or standard of evaluation a person possesses. Such concepts and standards are relatively few and determine or guide an individual’s evaluations of the many objects encountered in the daily life.”

According to Milton Rockeach, “ Values are global beliefs that guide actions and judgements across a variety of situations.”

4. Characteristics of Values

Values generally contain a tinge of principles of morality which direct an individual about what is right, good and desirable. Characteristics of values are given as follows:

a) Values provide standards of proficiency and integrity.

b) Values are fewer in number than attitudes.

c) Values are most central to the core of a person.

d) Values usually go beyond the specific objects, situations, or persons.

e) Values are relatively permanent and resistant to change.

f) When values are ranked in terms of their importance, it results into the value system of that person.

g) The value system of an individual provides a hierarchical framework which indicates the relative importance we assign o different values such as freedom, self respect, honesty, self respect and so on.

5. Importance of Values

Importance of values can be understood from the following points:

a) Values provide the basic framework for understanding attitudes and motivation of an individual.

b) Value system of an individual influences the perception about whatever is happening around in the environment.

c) Values symbolize the explanation of right and wrong.

d) Value system influences an individual’s decision making and choice of solution to various problems.

e) Values also play social function in an organisation. Those values which are derived from common experiences help in uniting the societies and groups together.

f) Values influence behaviour of an individual and therefore provide the criteria for evaluating the behaviour of others.

g) In order to meet the challenge of reconstructing the established work values all over the world, understanding the values becomes necessary for every manager in the organisation.

6. Types of Values

6.1 Milton Rokeach Classification

Milton Rokeach conducted a survey which is popularly known as Rokeach value survey (RVS) to classify the values. RVS is comprised of two types of value sets, each containing 18 individual value items. One set is called Terminal values and another is called Instrumental Values.

a) Terminal Values: Terminal values represent the desirable outcomes. These represent the ultimate goals that a person would strive to achieve in his lifetime. The examples of terminal values are:

Comfortable life

Sense of accomplishment (lasting contribution) Family security (caring the loved ones)

Mature love (spiritual intimacy) Self respect (self prestige)

Wisdom (good judgement of life)

Exciting life (active and thrilling life) Freedom (to be independent)

Social recognition (to gain respect and appreciation) True friendship (closeness with others)

A world of peace (freedom for stress and conflicts) A world of beauty (beauty of nature and arts)

Equality (equal opportunity for all) Happiness

Inner harmony National security Pleasure

b) Instrumental Values : Instrumental values refer to the preferred modes of behaviour or means to achieve desirable ends. These are the medium for attaining terminal values. For example, the instrumental value which can help in achieving the terminal value of ‘true friendship’ is being ‘responsible’. Similarly the instrumental value ‘independent’ can help in achieving the terminal value ‘freedom’. The examples of instrumental values are given as below:

Broad minded Capable

Courageous Forgiving Helpful

Imaginative Independent Intellectual Logical

Loving Obedient Polite

Responsible Self controlled

Various research studies on RVS have pointed out that the importance of RVS values vary among different groups. One study compared the value system of corporate executives of a steelworkers’ union and community activists. The significant differences among the value sets of the two groups were found. For example, community activists ranked ‘equality’ as their most important terminal value, whereas corporate executives ranked this value 12. Activists ranked ‘helpful’ as second most important instrumental value, whereas executives ranked this value 14. Values help an individual to conduct himself appropriately while interacting with other individuals or groups. According to Rokeach, values serve following functions:

They influence us to favour one particular situation or ideology over another. They take us to the particular position on social issues.

They guide us in presenting ourselves to others, judging, evaluating and praising others. They help us evaluating ourselves in comparison to others on moral grounds.

They help us persuading and influencing others to change their beliefs, attitudes and behaviours.

6.2 Allport,Vernon and Lindzey classification

G.W Allport, P.E. Vernon and G. Lindzey classified values into six major categories given as below:

a) Theoretical values : These values reflect a person’s interest in the discovery of truth through reasoning and systematic thinking. Ideal theoretical man values the discovery of truth.

b) Economic values : these values refer to one’s interest in practicality, usefulness and accumulating wealth. The ideal economic man values whatever is useful.

c) Aesthetic values: these values reflect one’s interest in beauty, art and creativity. The ideal aesthetic man relish artistic and aesthetic experiences in life.

d) Social values : these values reflect one’s interest in relationships. The ideal social man gives importance to sense of belongingness and love.

e) Political values : these values reflect one’s interest in obtaining power and influencing others behaviour. The ideal political man gives more importance to power.

f) Religious values : these values reflect one’s interest in unity.

The importance of the above mentioned six values varies from person to person. Understanding these values is very important for understanding behaviour of the individuals.

6.3 Organisational values and Work values

Organisational values : Organisations have certain core values that are so deeply ingrained that they guide company’s actions and practices to establish organisational culture. Good firms practice distinct and identifiable set of values that include management’s belief about service quality, innovation, importance of human resources, detail of information, openness of communication etc. Four types of common organisational values are:

Power, elitism and reward.

Effectiveness, efficiency and economy. Fairness, teamwork and law and order.

Defence, competitiveness and opportunism.

Work values : Work values are described as the concept of what is preferable from the given alternative mode of conducts and end states with respect to one’s work. In simple words, it can be described as individually held conceptions of what is desirable and what is undesirable with respect to individual’s work activities. T.V Rao proposed the following framework of work values which describes the best career where individual will give his best:

Creativity and challenge (Scope to do new things) Economic (satisfaction of financial needs)

Independence (Freedom, autonomy) Service (desire to serve others)

Work conditions (Conditions improving individual’s productivity)

Status (Designation and prestige)

Co-workers (availability of good colleagues) Security (continuity of job)

Academic (relationship of work and academics)

7. Effects of Values

The effect of values can be understood with the help of a framework provided by Meglino and Ravlin (1998). The framework is given as below:

As shown in the figure, values influence the outcomes in two ways:

a) First, individual values may affect beliefs, attitudes, decisions, performance and other behaviour patterns directly.

b) Second, individual values in congruence with values of others such as leader, colleagues or team members may also influence behavioural outcomes of an individual. But this influence is also dependant on task and situational variables. For example, in routine problems values will not affect behaviour much. But, the affect of values on behaviour will be higher in case of complex problems. This framework also explains that when employees believe that their individual values are aligned with the organisational values, they tend to be engaged in positive organisational behaviours, express organisational citizenship behaviour, organisational commitment and increase the level of their performance.

8. Sources of values

A person may develop values from the following sources:

a) Family : Family is the prime and most important source of obtaining values. Every child learns some values from his family since his childhood and retains those values in his mind throughout his life. The ways the parents nurture, educate and raise their child shape his personality and inculcate values in him. Family is most influential source in the individual’s learning of norms and values.

b) Society: After family, society also plays a major role developing value system of an individual. Every child learn basic manners and discipline from the school. Interaction with classmates, friends and teachers in the schools and other institutions also inculcate important values in the child. Besides schools and colleges, other groups of society such as religious groups, economic and political groups to which an individual belongs also affect value system of an individual.

c) Personal factors : Personal characteristics like intelligence, ability, appearance and education level of a person determines his value system very strongly. For example, an intelligent and educated person will understand and learn the social and work related values relatively faster than the uneducated person.

d) Culture : Cultural factors which influence value system of an individual include norms, beliefs and other behaviour patterns which are preferred and acceptable by the society. The values which an individual learns from the culture are passed on from one generation to another generation. An individual belongs to a society, group and an organisation. Thus he is a composite of many cultural elements. Whether an individual is cooperative, friendly or helpful depends upon the culture to which he belongs. The degree to which an individual is willing to take risks, believes in saving money for future, cares for the loved ones is also determined by cultural background.

e) Religion : generally individuals obtain strength and comforts from the religion which they follow. Religion is comprised of set of values and traditions which guide routine behaviour and decision making of an individual. Religious values help people determine what is good or what is bad.

f) Life experiences : Apart from the above mentioned sources, a man learns most from his own experiences and sometimes from experiences of others too. The values which an individual learns from own experiences of life are relatively long lasting and difficult to change.

g) Role demands : Role demand refers to the behaviour which is associated with the particular position or role profile in an organisation. Every individual plays multiple roles in his life. He has to play the role of an employee in an organisation, role of a family member in the family and friend in the social group. The problem occurs when there is a role conflict. In such case, individuals quickly learn the value system prevailing in the organisation so that they may survive and progress in the same organisation.

9. Values across culture

Due to globalisation, working with people of different culture has become a very common practice. In all multinational organisations you will find executives hailing from different cultural backgrounds. Values differ across the cultures. Therefore, it has become very important for the managers to understand the differences of values across the cultures so that they may be able to understand and predict behaviour of employees from different cultures. Hofstede’s framework is the most common approach used to assess and understand the variations of values across different cultures. Hofstede surveyed more than 116000 employees of IBM working across 40 countries in late 1970s to evaluate their work related values. The survey found that values of employees vary on six dimensions of culture. These dimensions are explained as below:

a) Power Distance: Power distance is the degree to which people accept uneven distribution of power in the society and institutions. People with high power distance tend to accept unequal power distribution. The people with low power distance relatively prefer equal distribution of power. Low power distance cultures adopt participative style of management whereas; high power distance cultures adopt autocratic style of management.

b) Individualism Vs. Collectivism: This value reflects preference of people for individual goals or group goals. Individualism refers the degree to which people value individual goals over the group goals. Such people tend to behave individually rather than as a member of group and believe that individual rights are above all. In opposite to this collectivism is the degree to which individuals give preference to group goals over individual goals. Collectivism represents a social framework where group members are expected to protect and care other members of the group.

c) Masculinity Vs Femininity: Value of masculinity represents the degree to which the culture favours traditional masculine roles like achievement, control and power. Such cultures do not give equality to men and women and fix separate roles for them. Masculine societies are generally male dominating societies. In opposite to this, femininity value represents no or little demarcation between the roles of males and females. Such societies respect males and females equally.

d) Uncertainty avoidance: It shows the degree to which people in a country prefer structured and planned situations over unstructured and unplanned situations. This value reflects the tendency of people to tolerate uncertainty and ambiguity or avoid uncertainty and ambiguity. The countries which score high on uncertainty avoidance, people tend to have increased level of apprehension for uncertainty and ambiguity. Such countries frame rules, regulations and laws to avoid uncertainty and always prefer structured situations. In opposite to this, the countries that score low on uncertainty avoidance take more risks, are not rules oriented and believe in change.

e) Long term Vs. short term orientation: Long term orientation is a national value which emphasises on future, saving and perseverance. Those countries which have long term orientation generally live and think more for future than for present. On the other hand, short term orientation emphasises on past and present.

f) Indulgence Vs. restraint: Indulgence is the degree to which people prefer to enjoy life, have fun and fulfil natural desires. Whereas, restraint is the degree to which gratification of individual’s needs, desires and behaviour is governed by social norms.

10. Values and OB

It has been already discussed in the above paragraphs that values influence behaviour of an individual. Further influence of values on the behaviour of an individual in an organisational setting can be specifically understood from following points:

a) An individual’s perception about the problems faced by him is influenced by his value system. As a result the decisions taken by him to solve the problems also reflects his values.

b) Values also affect interpersonal relationships in the organisation. The way employees look at each other, cooperate with each other and compete with each other depends upon their values.

c) Values guide an individual about what is ethical and unethical. Therefore, the degree to which an employee remains ethical or indulge in unethical practices will also depend on his values.

d) The extent to which an individual cope up with the organisation’s pressures and contribute in the achievement of organisational goals is determined by his value system. The employees stay in the organisations for a longer period if their values match with organisational values and they may leave the organisation if their values do not match with organisational values.

11. Summary

Values are long lasting and stable beliefs about what is good or what is bad. In order to understand organisational behaviour, it is very important to study values first because values of an individual strongly influence his attitudes, perceptions, needs and motives at work place. Values are very powerful force influencing human behaviour. Effective managers have to study the value system underlying behaviour of the employees, because only then they will be able to understand why people behave in a particular fashion sometimes. Values can be described as the basic convictions that guide an individual that a particular mode of conduct or final outcome is personally or socially acceptable or not. Values contain an element of judgement which influences an individual’s understanding about what is good or bad, desirable or undesirable. Values are inherited as well as learnt through the process of socialisation.

Values can be classified into two types viz. terminal values and instrumental values. Terminal values represent the desirable outcomes. These represent the ultimate goals that a person would strive to achieve in his lifetime. Instrumental values refer to the preferred modes of behaviour or means to achieve desirable ends. These are the medium for attaining terminal values.

Organisational values are certain core values that are so deeply ingrained that they guide company’s actions and practices to establish organisational culture.

Work values are described as the concept of what is preferable from the given alternative mode of conducts and end states with respect to one’s work. In simple words, it can be described as individually held conceptions of what is desirable and what is undesirable with respect to individual’s work activities.

Major source from which an individual can obtain values are: family, society, religion, culture, personal factors, life experiences and role demands. Today due to globalisation, working with people of different culture has become a very common practice. In all multinational organisations you will find executives hailing from different cultural backgrounds. Values differ across the cultures. Therefore, it has become very important for the managers to understand the differences of values across the cultures so that they may be able to understand and predict behaviour of employees from different countries. Hofstede’s framework for assessing cultures is the most common approach used to understand the variations of values across different cultures. According to this framework, values of employees vary on six dimensions of culture. These dimensions are: power distance, uncertainty avoidance, individualism vs. collectivism, masculinity vs femininity, long term orientation vs short term orientation, indulgence vs restraint.

Learn More:

1. Stephen Robins (2012 ). Organizational Behaviour . New Delhi-110092: Prentice Hal l publications.

2. Aswathappa, K. (2003). Organisational Behaviou r. Himalaya Publishing House.

3. Nair, S. R. (2010). Organisational Behaviour (text & Cases) . Himalaya Publishing House.

4. Prasad, L. M. (2014). Organizational Behaviour . Sultan Chand & Sons.

5. Greenberg, J. (2003). Organizational Behavior: The State of the Science. Lawrence Erlbaum Associates

6. Miner, J. B. (2002). Organizational Behavior: Foundations, Theories, and Analyses. Oxford University Press.

7. Pareek, U. (2014), Understanding Organisational Behaviour , Oxford University Press (Revised and Updated by Sushama Khanna)

8. Kalliath, T. and Brough, P. (2011), Organisational Behaviour , McGraw Hill.

9. http://studymore.org.uk/glolea.htm

10. http://www.bput.ac.in/lecture_notes/ob.pdf

A generative AI reset: Rewiring to turn potential into value in 2024

It’s time for a generative AI (gen AI) reset. The initial enthusiasm and flurry of activity in 2023 is giving way to second thoughts and recalibrations as companies realize that capturing gen AI’s enormous potential value is harder than expected .

With 2024 shaping up to be the year for gen AI to prove its value, companies should keep in mind the hard lessons learned with digital and AI transformations: competitive advantage comes from building organizational and technological capabilities to broadly innovate, deploy, and improve solutions at scale—in effect, rewiring the business for distributed digital and AI innovation.

About QuantumBlack, AI by McKinsey

QuantumBlack, McKinsey’s AI arm, helps companies transform using the power of technology, technical expertise, and industry experts. With thousands of practitioners at QuantumBlack (data engineers, data scientists, product managers, designers, and software engineers) and McKinsey (industry and domain experts), we are working to solve the world’s most important AI challenges. QuantumBlack Labs is our center of technology development and client innovation, which has been driving cutting-edge advancements and developments in AI through locations across the globe.

Companies looking to score early wins with gen AI should move quickly. But those hoping that gen AI offers a shortcut past the tough—and necessary—organizational surgery are likely to meet with disappointing results. Launching pilots is (relatively) easy; getting pilots to scale and create meaningful value is hard because they require a broad set of changes to the way work actually gets done.

Let’s briefly look at what this has meant for one Pacific region telecommunications company. The company hired a chief data and AI officer with a mandate to “enable the organization to create value with data and AI.” The chief data and AI officer worked with the business to develop the strategic vision and implement the road map for the use cases. After a scan of domains (that is, customer journeys or functions) and use case opportunities across the enterprise, leadership prioritized the home-servicing/maintenance domain to pilot and then scale as part of a larger sequencing of initiatives. They targeted, in particular, the development of a gen AI tool to help dispatchers and service operators better predict the types of calls and parts needed when servicing homes.

Leadership put in place cross-functional product teams with shared objectives and incentives to build the gen AI tool. As part of an effort to upskill the entire enterprise to better work with data and gen AI tools, they also set up a data and AI academy, which the dispatchers and service operators enrolled in as part of their training. To provide the technology and data underpinnings for gen AI, the chief data and AI officer also selected a large language model (LLM) and cloud provider that could meet the needs of the domain as well as serve other parts of the enterprise. The chief data and AI officer also oversaw the implementation of a data architecture so that the clean and reliable data (including service histories and inventory databases) needed to build the gen AI tool could be delivered quickly and responsibly.

Creating value beyond the hype

Let’s deliver on the promise of technology from strategy to scale.

Our book Rewired: The McKinsey Guide to Outcompeting in the Age of Digital and AI (Wiley, June 2023) provides a detailed manual on the six capabilities needed to deliver the kind of broad change that harnesses digital and AI technology. In this article, we will explore how to extend each of those capabilities to implement a successful gen AI program at scale. While recognizing that these are still early days and that there is much more to learn, our experience has shown that breaking open the gen AI opportunity requires companies to rewire how they work in the following ways.

Figure out where gen AI copilots can give you a real competitive advantage

The broad excitement around gen AI and its relative ease of use has led to a burst of experimentation across organizations. Most of these initiatives, however, won’t generate a competitive advantage. One bank, for example, bought tens of thousands of GitHub Copilot licenses, but since it didn’t have a clear sense of how to work with the technology, progress was slow. Another unfocused effort we often see is when companies move to incorporate gen AI into their customer service capabilities. Customer service is a commodity capability, not part of the core business, for most companies. While gen AI might help with productivity in such cases, it won’t create a competitive advantage.

To create competitive advantage, companies should first understand the difference between being a “taker” (a user of available tools, often via APIs and subscription services), a “shaper” (an integrator of available models with proprietary data), and a “maker” (a builder of LLMs). For now, the maker approach is too expensive for most companies, so the sweet spot for businesses is implementing a taker model for productivity improvements while building shaper applications for competitive advantage.

Much of gen AI’s near-term value is closely tied to its ability to help people do their current jobs better. In this way, gen AI tools act as copilots that work side by side with an employee, creating an initial block of code that a developer can adapt, for example, or drafting a requisition order for a new part that a maintenance worker in the field can review and submit (see sidebar “Copilot examples across three generative AI archetypes”). This means companies should be focusing on where copilot technology can have the biggest impact on their priority programs.

Copilot examples across three generative AI archetypes

“Taker” copilots help real estate customers sift through property options and find the most promising one, write code for a developer, and summarize investor transcripts.
“Shaper” copilots provide recommendations to sales reps for upselling customers by connecting generative AI tools to customer relationship management systems, financial systems, and customer behavior histories; create virtual assistants to personalize treatments for patients; and recommend solutions for maintenance workers based on historical data.
“Maker” copilots are foundation models that lab scientists at pharmaceutical companies can use to find and test new and better drugs more quickly.

Some industrial companies, for example, have identified maintenance as a critical domain for their business. Reviewing maintenance reports and spending time with workers on the front lines can help determine where a gen AI copilot could make a big difference, such as in identifying issues with equipment failures quickly and early on. A gen AI copilot can also help identify root causes of truck breakdowns and recommend resolutions much more quickly than usual, as well as act as an ongoing source for best practices or standard operating procedures.

The challenge with copilots is figuring out how to generate revenue from increased productivity. In the case of customer service centers, for example, companies can stop recruiting new agents and use attrition to potentially achieve real financial gains. Defining the plans for how to generate revenue from the increased productivity up front, therefore, is crucial to capturing the value.

McKinsey Live Event: Unlocking the full value of gen AI

Join our colleagues Jessica Lamb and Gayatri Shenai on April 8, as they discuss how companies can navigate the ever-changing world of gen AI.

Upskill the talent you have but be clear about the gen-AI-specific skills you need

By now, most companies have a decent understanding of the technical gen AI skills they need, such as model fine-tuning, vector database administration, prompt engineering, and context engineering. In many cases, these are skills that you can train your existing workforce to develop. Those with existing AI and machine learning (ML) capabilities have a strong head start. Data engineers, for example, can learn multimodal processing and vector database management, MLOps (ML operations) engineers can extend their skills to LLMOps (LLM operations), and data scientists can develop prompt engineering, bias detection, and fine-tuning skills.

A sample of new generative AI skills needed

The following are examples of new skills needed for the successful deployment of generative AI tools:

data scientist:
prompt engineering
in-context learning
bias detection
pattern identification
reinforcement learning from human feedback
hyperparameter/large language model fine-tuning; transfer learning
data engineer:
data wrangling and data warehousing
data pipeline construction
multimodal processing
vector database management

The learning process can take two to three months to get to a decent level of competence because of the complexities in learning what various LLMs can and can’t do and how best to use them. The coders need to gain experience building software, testing, and validating answers, for example. It took one financial-services company three months to train its best data scientists to a high level of competence. While courses and documentation are available—many LLM providers have boot camps for developers—we have found that the most effective way to build capabilities at scale is through apprenticeship, training people to then train others, and building communities of practitioners. Rotating experts through teams to train others, scheduling regular sessions for people to share learnings, and hosting biweekly documentation review sessions are practices that have proven successful in building communities of practitioners (see sidebar “A sample of new generative AI skills needed”).

It’s important to bear in mind that successful gen AI skills are about more than coding proficiency. Our experience in developing our own gen AI platform, Lilli , showed us that the best gen AI technical talent has design skills to uncover where to focus solutions, contextual understanding to ensure the most relevant and high-quality answers are generated, collaboration skills to work well with knowledge experts (to test and validate answers and develop an appropriate curation approach), strong forensic skills to figure out causes of breakdowns (is the issue the data, the interpretation of the user’s intent, the quality of metadata on embeddings, or something else?), and anticipation skills to conceive of and plan for possible outcomes and to put the right kind of tracking into their code. A pure coder who doesn’t intrinsically have these skills may not be as useful a team member.

While current upskilling is largely based on a “learn on the job” approach, we see a rapid market emerging for people who have learned these skills over the past year. That skill growth is moving quickly. GitHub reported that developers were working on gen AI projects “in big numbers,” and that 65,000 public gen AI projects were created on its platform in 2023—a jump of almost 250 percent over the previous year. If your company is just starting its gen AI journey, you could consider hiring two or three senior engineers who have built a gen AI shaper product for their companies. This could greatly accelerate your efforts.

Form a centralized team to establish standards that enable responsible scaling

To ensure that all parts of the business can scale gen AI capabilities, centralizing competencies is a natural first move. The critical focus for this central team will be to develop and put in place protocols and standards to support scale, ensuring that teams can access models while also minimizing risk and containing costs. The team’s work could include, for example, procuring models and prescribing ways to access them, developing standards for data readiness, setting up approved prompt libraries, and allocating resources.

While developing Lilli, our team had its mind on scale when it created an open plug-in architecture and setting standards for how APIs should function and be built. They developed standardized tooling and infrastructure where teams could securely experiment and access a GPT LLM , a gateway with preapproved APIs that teams could access, and a self-serve developer portal. Our goal is that this approach, over time, can help shift “Lilli as a product” (that a handful of teams use to build specific solutions) to “Lilli as a platform” (that teams across the enterprise can access to build other products).

For teams developing gen AI solutions, squad composition will be similar to AI teams but with data engineers and data scientists with gen AI experience and more contributors from risk management, compliance, and legal functions. The general idea of staffing squads with resources that are federated from the different expertise areas will not change, but the skill composition of a gen-AI-intensive squad will.

Set up the technology architecture to scale

Building a gen AI model is often relatively straightforward, but making it fully operational at scale is a different matter entirely. We’ve seen engineers build a basic chatbot in a week, but releasing a stable, accurate, and compliant version that scales can take four months. That’s why, our experience shows, the actual model costs may be less than 10 to 15 percent of the total costs of the solution.

Building for scale doesn’t mean building a new technology architecture. But it does mean focusing on a few core decisions that simplify and speed up processes without breaking the bank. Three such decisions stand out:

Focus on reusing your technology. Reusing code can increase the development speed of gen AI use cases by 30 to 50 percent. One good approach is simply creating a source for approved tools, code, and components. A financial-services company, for example, created a library of production-grade tools, which had been approved by both the security and legal teams, and made them available in a library for teams to use. More important is taking the time to identify and build those capabilities that are common across the most priority use cases. The same financial-services company, for example, identified three components that could be reused for more than 100 identified use cases. By building those first, they were able to generate a significant portion of the code base for all the identified use cases—essentially giving every application a big head start.
Focus the architecture on enabling efficient connections between gen AI models and internal systems. For gen AI models to work effectively in the shaper archetype, they need access to a business’s data and applications. Advances in integration and orchestration frameworks have significantly reduced the effort required to make those connections. But laying out what those integrations are and how to enable them is critical to ensure these models work efficiently and to avoid the complexity that creates technical debt (the “tax” a company pays in terms of time and resources needed to redress existing technology issues). Chief information officers and chief technology officers can define reference architectures and integration standards for their organizations. Key elements should include a model hub, which contains trained and approved models that can be provisioned on demand; standard APIs that act as bridges connecting gen AI models to applications or data; and context management and caching, which speed up processing by providing models with relevant information from enterprise data sources.
Build up your testing and quality assurance capabilities. Our own experience building Lilli taught us to prioritize testing over development. Our team invested in not only developing testing protocols for each stage of development but also aligning the entire team so that, for example, it was clear who specifically needed to sign off on each stage of the process. This slowed down initial development but sped up the overall delivery pace and quality by cutting back on errors and the time needed to fix mistakes.

Ensure data quality and focus on unstructured data to fuel your models

The ability of a business to generate and scale value from gen AI models will depend on how well it takes advantage of its own data. As with technology, targeted upgrades to existing data architecture are needed to maximize the future strategic benefits of gen AI:

Be targeted in ramping up your data quality and data augmentation efforts. While data quality has always been an important issue, the scale and scope of data that gen AI models can use—especially unstructured data—has made this issue much more consequential. For this reason, it’s critical to get the data foundations right, from clarifying decision rights to defining clear data processes to establishing taxonomies so models can access the data they need. The companies that do this well tie their data quality and augmentation efforts to the specific AI/gen AI application and use case—you don’t need this data foundation to extend to every corner of the enterprise. This could mean, for example, developing a new data repository for all equipment specifications and reported issues to better support maintenance copilot applications.
Understand what value is locked into your unstructured data. Most organizations have traditionally focused their data efforts on structured data (values that can be organized in tables, such as prices and features). But the real value from LLMs comes from their ability to work with unstructured data (for example, PowerPoint slides, videos, and text). Companies can map out which unstructured data sources are most valuable and establish metadata tagging standards so models can process the data and teams can find what they need (tagging is particularly important to help companies remove data from models as well, if necessary). Be creative in thinking about data opportunities. Some companies, for example, are interviewing senior employees as they retire and feeding that captured institutional knowledge into an LLM to help improve their copilot performance.
Optimize to lower costs at scale. There is often as much as a tenfold difference between what companies pay for data and what they could be paying if they optimized their data infrastructure and underlying costs. This issue often stems from companies scaling their proofs of concept without optimizing their data approach. Two costs generally stand out. One is storage costs arising from companies uploading terabytes of data into the cloud and wanting that data available 24/7. In practice, companies rarely need more than 10 percent of their data to have that level of availability, and accessing the rest over a 24- or 48-hour period is a much cheaper option. The other costs relate to computation with models that require on-call access to thousands of processors to run. This is especially the case when companies are building their own models (the maker archetype) but also when they are using pretrained models and running them with their own data and use cases (the shaper archetype). Companies could take a close look at how they can optimize computation costs on cloud platforms—for instance, putting some models in a queue to run when processors aren’t being used (such as when Americans go to bed and consumption of computing services like Netflix decreases) is a much cheaper option.

Build trust and reusability to drive adoption and scale

Because many people have concerns about gen AI, the bar on explaining how these tools work is much higher than for most solutions. People who use the tools want to know how they work, not just what they do. So it’s important to invest extra time and money to build trust by ensuring model accuracy and making it easy to check answers.

One insurance company, for example, created a gen AI tool to help manage claims. As part of the tool, it listed all the guardrails that had been put in place, and for each answer provided a link to the sentence or page of the relevant policy documents. The company also used an LLM to generate many variations of the same question to ensure answer consistency. These steps, among others, were critical to helping end users build trust in the tool.

Part of the training for maintenance teams using a gen AI tool should be to help them understand the limitations of models and how best to get the right answers. That includes teaching workers strategies to get to the best answer as fast as possible by starting with broad questions then narrowing them down. This provides the model with more context, and it also helps remove any bias of the people who might think they know the answer already. Having model interfaces that look and feel the same as existing tools also helps users feel less pressured to learn something new each time a new application is introduced.

Getting to scale means that businesses will need to stop building one-off solutions that are hard to use for other similar use cases. One global energy and materials company, for example, has established ease of reuse as a key requirement for all gen AI models, and has found in early iterations that 50 to 60 percent of its components can be reused. This means setting standards for developing gen AI assets (for example, prompts and context) that can be easily reused for other cases.

While many of the risk issues relating to gen AI are evolutions of discussions that were already brewing—for instance, data privacy, security, bias risk, job displacement, and intellectual property protection—gen AI has greatly expanded that risk landscape. Just 21 percent of companies reporting AI adoption say they have established policies governing employees’ use of gen AI technologies.

Similarly, a set of tests for AI/gen AI solutions should be established to demonstrate that data privacy, debiasing, and intellectual property protection are respected. Some organizations, in fact, are proposing to release models accompanied with documentation that details their performance characteristics. Documenting your decisions and rationales can be particularly helpful in conversations with regulators.

In some ways, this article is premature—so much is changing that we’ll likely have a profoundly different understanding of gen AI and its capabilities in a year’s time. But the core truths of finding value and driving change will still apply. How well companies have learned those lessons may largely determine how successful they’ll be in capturing that value.

The authors wish to thank Michael Chui, Juan Couto, Ben Ellencweig, Josh Gartner, Bryce Hall, Holger Harreis, Phil Hudelson, Suzana Iacob, Sid Kamath, Neerav Kingsland, Kitti Lakner, Robert Levin, Matej Macak, Lapo Mori, Alex Peluffo, Aldo Rosales, Erik Roth, Abdul Wahab Shaikh, and Stephen Xu for their contributions to this article.

This article was edited by Barr Seitz, an editorial director in the New York office.

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Introduction to Organizational Behavior

First Online: 02 August 2023

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Josiah Kwia 4

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Organizational behavior (OB) takes a systematic approach to understand how individuals and groups behave in organizations as well as the relationship between people and organizations. This chapter examines organizational behavior from the viewpoints of professionals and researchers. First, a case is presented describing individuals’ behavior in difficult circumstances, and then a brief definition of organizational behavior follows. Next, we will analyze how organizational behavior differs from human resources. Then we will proceed to OB during the pandemic. We will also review why we study OB: from Taylor’s Principles of Scientific Management to Mayo and Roethlisberger’s Human Relations Theory (Hawthorne Effect), to understand the history of organizational behavior. The following is a synopsis of all the topics that will be discussed in the book. Last, we look at organizational behavior research. This section provides an explanation of why and how we conduct OB research, as well as breaks down various study designs and measurement issues.

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Henri Fayol developed an approach to managing businesses that have come to be known as Fayolism during his career as a mining engineer, executive, author, and director. The development of modern management is generally attributed to Henri Fayol (Fayol, 1949 ). Over the course of the twentieth century, his management theories influenced industrial management practices in a significant way. The ideas of Fayol were developed independently of other theories that were prevalent at the time, such as those of Elton Mayo and Human Relations. Fayol outlined the skills needed for effective management in his 14 Principles of Management. Fayol’s management theories are still used today. Besides the Principles, Fayol identified five basic management functions. Among the management functions are planning, organizing, commanding, coordinating, and controlling. Fayol emphasized that managerial skills are different from technical skills. Moreover, Fayol recognized that management is a field requiring research, teaching, and development. Fayol proposed 14 principles and five functions that form the basis of Administrative Theory. A variety of nonacademics shared their experiences and contributed to its progress. Fayol’s Five Functions of Management originated the planning-organizing-leading-controlling framework that remains an influential management framework throughout the world today.

Abbreviations

Captain Chengquan

Human Resources

Human Relations Theory

National Football Association

National Hockey League

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Kwia, J. (2023). Introduction to Organizational Behavior. In: Hou, N., Tan, J.A., Valdez Paez, G. (eds) Organizational Behavior. Springer, Cham. https://doi.org/10.1007/978-3-031-31356-1_1

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