(Mt) – MGT 422 Harvard University Decision Making Biases and Pitfalls Discussion

Inside all new copies of this textbook is a pre-paid access code that students can use to access MyManagementLab at www.pearsonmiddleeastawe.com/robbinsjudge. Organizational Behavior This textbook is accompanied by MyManagementLab, a powerful online tool that combines assessment, reporting, and personalized study to help both students and instructors succeed. With its abundant collection of resources, MyManagementLab offers students many ways to study, and instructors many ways to save time—all in one convenient place. Arab World Edition This edition of Organizational Behavior provides students in the Arab region with an up-to-date and culturally aware analysis of key areas of organizational behavior, including women in business, intercultural management, conflict management, family business, ethics, and employee relations. This book presents Arab students of organizational behavior with a reference point that uses individuals and organizations that they are familiar with, including Byblos Bank, Intercontinental Hotels, Sanita, Aramex, Saudi Aramco, Sabic, Etisalat, and many more. Through this book, Arab learners will come to understand that organizational behavior theory is applicable and relevant not only to large, multi-national firms but also to their local business environments and workplaces. Organizational Behavior Stephen T. Robbins Timothy A. Judge Elham S. Hasham Robbins Judge Hasham A01_ROBB9658_15_SE_FM.indd 1 7/31/12 5:48 PM A01_ROBB9658_15_SE_FM.indd 2 7/31/12 5:48 PM Organizational Behavior Arab World Edition STEPHEN P. ROBBINS San Diego State University TIMOTHY A. JUDGE University of Florida ELHAM S. HASHAM Notre Dame University, Lebanon A01_ROBB9658_15_SE_FM.indd 3 7/31/12 5:48 PM Acquisitions Editor: Rasheed Roussan Senior Development Editor: Sophie Bulbrook Editor: Fay Gibbons Copy-editor: Valerie Bingham Proofreaders: Sylvia Worth, Peter Gill Design Manager: Sarah Fach Permissions Editor: Sarah Deakin Picture Researchers: Alison Prior, Zo Naciri Indexer: Indexing Specialists (UK) Ltd Marketing Manager: Sue Mainey Production Controller: Christopher Crow Cover Designer: Sarah Fach Typesetter: Graphicraft Typeface: ITC New Baskerville Std 10.5pt/12pt Printed in China Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world The rights of Stephen Robbins, Timothy Judge, and Elham Hasham to be identified as authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. Authorized adaptation from the United States edition, entitled Organizational Behavior, 13th Edition, ISBN: 0136007171 by Robbins, Stephen P.; Judge, Timothy A., published by Pearson Education, Inc, publishing as Prentice Hall, Copyright © 2009 All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage retrieval system, without permission from Pearson Education, Inc. This Arab World adaptation edition published by Pearson Education Ltd, Copyright © 2012. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. Pearson Education is not responsible for the content of third-party internet sites. Credits and acknowledgments for material borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within the text, in the endnotes, or on page 527. 20 19 18 17 16 15 14 13 12 11 IMP 10 9 8 7 6 5 4 3 2 1 ISBN: 978-1-4082-5965-8 A01_ROBB9658_15_SE_FM.indd 4 7/31/12 5:48 PM To my mother, Juliet, my father, Said, and my brothers, Francois and Anthony: Thank you, and thank God. —Elham S. Hasham A01_ROBB9658_15_SE_FM.indd 5 7/31/12 5:48 PM A01_ROBB9658_15_SE_FM.indd 6 7/31/12 5:48 PM About the Authors Stephen P. Robbins Education Ph.D. University of Arizona Professional Experience Academic Positions: Professor, San Diego State University, Southern Illinois University at Edwardsville, University of Baltimore, Concordia University in Montreal, and University of Nebraska at Omaha. Research: Research interests have focused on conflict, power, and politics in organizations, behavioral decision making, and the development of effective interpersonal skills. Books Published: World’s best-selling author of textbooks in both management and organizational behavior. His books have sold more than six million copies, have been translated into 20 languages, and editions have been adapted for Canada, Australia, South Africa, and India. These include l l l l l l l l l l l Essentials of Organizational Behavior, 10th ed. (Prentice Hall, 2010) Management, 11th ed., with Mary Coulter (Prentice Hall, 2011) Human Resource Management, 10th ed., with David DeCenzo (Wiley, 2010) Prentice Hall’s Self-Assessment Library 3.4 (Prentice Hall, 2010) Fundamentals of Management, 7th ed., with David DeCenzo and Mary Coulter (Prentice Hall, 2011) Supervision Today!, 6th ed., with David DeCenzo (Prentice Hall, 2010) Training in Interpersonal Skills, 6th ed., with Phillip Hunsaker (Prentice Hall, 2011) Managing Today!, 2nd ed. (Prentice Hall, 2000) Organization Theory, 3rd ed. (Prentice Hall, 1990) The Truth About Managing People, 2nd ed. (Financial Times/Prentice Hall, 2008) Decide and Conquer: Make Winning Decisions and Take Control of Your Life (Financial Times/Prentice Hall, 2004). Other Interests In his ‘other life,’ Dr. Robbins actively participates in masters’ track competition. Since turning 50 in 1993, he has won 22 national championships and 14 world titles. He is the current world record holder at 100 meters (12.37 seconds) and 200 meters (25.20 seconds) for men 65 and over. vii A01_ROBB9658_15_SE_FM.indd 7 7/31/12 5:48 PM viii About the Authors Timothy A. Judge Education Ph.D. University of Illinois at Urbana-Champaign Professional Experience Academic Positions: Matherly-McKethan Eminent Scholar in Management, Warrington College of Business Administration, University of Florida; Stanley M. Howe Professor in Leadership, Henry B. Tippie College of Business, University of Iowa; Associate Professor (with tenure), Department of Human Resource Studies, School of Industrial and Labor Relations, Cornell University; Lecturer, Charles University, Czech Republic, and Comenius University, Slovakia; Instructor, Industrial/Organizational Psychology, Department of Psychology, University of Illinois at Urbana-Champaign. Research: Dr. Judge’s primary research interests are in (1) personality, moods, and emotions, (2) job attitudes, (3) leadership and influence behaviors, and (4) careers (person-organization fit, career success). Dr. Judge has published more than 120 articles in these and other major topics in journals such as Journal of Organizational Behavior, Personnel Psychology, Academy of Management Journal, Journal of Applied Psychology, European Journal of Personality, and European Journal of Work and Organizational Psychology. Fellowship: Dr. Judge is a fellow of the American Psychological Association, the Academy of Management, the Society for Industrial and Organizational Psychology, and the American Psychological Society. Awards: In 1995, Dr. Judge received the Ernest J. McCormick Award for Distinguished Early Career Contributions from the Society for Industrial and Organizational Psychology, and in 2001, he received the Larry L. Cummings Award for mid-career contributions from the Organizational Behavior Division of the Academy of Management. In 2007, he received the Professional Practice Award from the Institute of Industrial and Labor Relations, University of Illinois. Books Published: H. G. Heneman III, and T. A. Judge, Staffing Organizations, 6th ed. (Madison, WI: Mendota House/Irwin, 2009). Other Interests Although he cannot keep up (literally!) with Steve’s accomplishments on the track, Dr. Judge enjoys golf, cooking and baking, literature (he’s a particular fan of Thomas Hardy, and is a member of the Thomas Hardy Society), and keeping up with his three children, who range in age from 7 to 21. A01_ROBB9658_15_SE_FM.indd 8 7/31/12 5:48 PM About the Authors ix Elham S. Hasham Education Ph.D. Educational Leadership, Management & Administration, University of Leicester, England Professional Experience Professional and Academic Positions: At Notre Dame University, Lebanon, Dr Hasham is currently an Associate Professor, Coordinator of undergraduate and graduate courses and Graduate Advisor. She previously held posts as Dean of Students (North Lebanon Campus), Director of Admissions and International Recruitment, and Acting Director of Tests and Measurements. Dr Elham is also CEO of Australian Consulting Engineers and Architects (ACEA), and Australian Lebanese Design Services (ALDS); and Coordinator of a Human Resource Management Program, Master of International Business, which is a joint venture between Notre Dame University, Lebanon and Bordeaux University, Paris. Research: Dr. Hasham’s research interests include Organizational Behavior, Business Ethics, Intercultural Communication and Management, Global Human Resource Management, Leadership and Quality Decision Making, Entrepre­ neurship, Strategic Management, Marketing and Business Policy Strategy. She has presented numerous papers at both regional and international conferences, resulting in publications in refereed journals and conference proceedings, and has written a variety of articles and case studies for a number of books published by Pearson Education. Memberships: Dr. Hasham is a member of various prestigious associations and organizations such as the Lebanese League of Women in Business (LLWB); the Human Resource Association of Lebanon (HRAL); the Notre Dame University Education Society; the International Association of Universities (IAU); NAFSA: Association of International Educators; and the European Association of International Educators (EAIE). Other Interests Dr. Hasham is interested in all activities that can develop her intellectual, spiritual, physical, and social status. She is a people’s person and has excellent interpersonal skills that have contributed to a worldwide network. She also enjoys reading, music, tennis, swimming, and nature in general. Dr. Hasham is an advocate of participative management and believes that we need human capital, and must invest in people, to receive the performance and productivity that we seek as leaders. A01_ROBB9658_15_SE_FM.indd 9 7/31/12 5:48 PM A01_ROBB9658_15_SE_FM.indd 10 7/31/12 5:48 PM Brief Contents Foreword xxix Preface xxxi Acknowledgments 1 xxxv Introduction   1 What Is Organizational Behavior? 2 The Individual   2   3   4   5   6 3 3 Foundations of Individual Behavior: Personality and Values 37 Attitudes and Job Satisfaction 69 Perception and Individual Decision Making 89 Motivation: Concepts and Applications 113 Emotions and Moods 151 The Group   7   8   9 10 11 12 Foundations of Group Behavior 177 Understanding Work Teams 205 Communication 229 Leadership 257 Power and Politics 289 Conflict and Negotiation 315 xi A01_ROBB9658_15_SE_FM.indd 11 7/31/12 5:48 PM xii Brief Contents 4 The Organization System 13 Foundations of Organizational Structure 341 14 Organizational Culture 365 15 Human Resource Policies and Practices in the Arab World 5 389 Organization Dynamics 16 Organizational Change and Stress Management 419 17 Organizational Behavior in the Family Business 447 6 Specifics in OB 18 Intercultural Management: The Significance to Organizational Behavior 471 19 Female Entrepreneurs in the Arab World 491 Appendix A Research in Organizational Behavior Comprehensive Cases 509 516 Credits 527 Endnotes 528 Glossary 570 Index 582 A01_ROBB9658_15_SE_FM.indd 12 7/31/12 5:48 PM Contents Foreword xxix Preface xxxi Acknowledgments 1 1 xxxv Introduction What Is Organizational Behavior? 3 The Importance of Interpersonal Skills 4 What Managers Do 5 Management Functions 5 • Management Roles 6 • Management Skills 8 • Effective Versus Successful Managerial Activities 8 • A Review of the Manager’s Job 9 This Is Organizational Behavior 10 Complementing Intuition with Systematic Study 10 Disciplines That Contribute to OB 12 Psychology 13 • Social Psychology 13 • Sociology 14 • Anthropology 14 There Are Few Absolutes in OB 14 Challenges and Opportunities for OB 14 The Significance of Globalization 15 • Managing Workforce Diversity 16 • Improving Quality and Productivity 18 • Improving Customer Service 19 • Improving People Skills 19 • Stimulating Innovation and Change 20 • Helping Employees Balance Work–Life Conflicts 20 • Creating a Positive Work Environment 21 • Improving Ethical Behavior 22 Developing an OB Model 23 An Overview 23 • The Dependent Variables 24 • The Independent Variables 27 • Toward a Contingency OB Model 28 Global Implications 30 Summary and Implications for Managers 30 Self-Assessment Library How Much Do I Know About Organizational Behavior? 4 OB in the News Other Disciplines Make Use of OB Concepts 13 International OB Organizational Citizenship at Byblos Bank 26 Point/Counterpoint In Search of the Quick Fix 31 xiii A01_ROBB9658_15_SE_FM.indd 13 7/31/12 5:48 PM xiv Contents Questions for Review 31 Discussion Exercise A Day in the Life of Hussam 32 Ethical Considerations 32 Critical Analysis Equal Opportunity at Crepaway 33 Research Exercise 33 2 The Individual 2 Foundations of Individual Behavior: Personality and Values 37 Ability 38 Intellectual Abilities 38 • Physical Abilities 39 Biographical Characteristics 41 Age 41 • Gender 42 • Race 43 • Tenure 43 Learning 44 A Definition of Learning 44 • Theories of Learning 45 • Shaping: A Managerial Tool 47 Personality 50 What Is Personality? 50 • Measuring Personality 51 • The Myers-Briggs Type Indicator 52 • The Big Five Personality Model 53 • Other Personality Traits Relevant to OB 54 Values 58 The Importance of Values 58 The Relationship Between an Individual’s Personality and the Workplace 59 Person–Job Fit 59 • Person–Organization Fit 60 Linking Cultures and Behavior 60 Hofstede’s Framework for Assessing Cultures 61 • The GLOBE Framework for Assessing Cultures 62 Global Implications 62 Intellectual Abilities 62 • Biographical Characteristics 62 • Learning 63 • Personality 63 • Values 63 Summary and Implications for Managers 63 Self-Assessment Library What’s My Attitude Toward Achievement? 38 International OB Cultural Intelligence Is Necessary 40 OB in the News Whatever Men Can Do, Women Can Also Do 44 Self-Assessment Library How Good Am I at Disciplining Others? 48 Point/Counterpoint All Human Behavior is Learned 65 A01_ROBB9658_15_SE_FM.indd 14 7/31/12 5:48 PM xv Contents Questions for Review 65 Discussion Exercise 66 Ethical Considerations 66 Critical Analysis Qatar: A Country with a Vision 66 Research Exercise 67 3 Attitudes and Job Satisfaction 69 Attitudes 70 What Are the Main Components of Attitudes? 70 • Is There a Relationship Between Behavior and Attitudes? 71 • What Are the Major Job Attitudes? 73 Job Satisfaction 77 Measuring Job Satisfaction 77 • How Satisfied Are People in Their Jobs? 77 • What Causes Job Satisfaction? 78 • The Impact of Satisfied and Dissatisfied Employees on the Workplace 80 Global Implications 83 Is Job Satisfaction Specific to Cultures? 83 • Are Employees in Western Cultures More Satisfied with Their Jobs Than Those in the East? 83 Summary and Implications for Managers 84 Self-Assessment Library How Satisfied Am I With My Job? 70 International OB Organizational Commitment at Aramex 74 Self-Assessment Library Am I Engaged? 76 OB in the News Job Satisfaction: Does It Differ Across Cultures? 76 Point/Counterpoint Managers Can Create Satisfied Employees 85 Questions for Review 85 Discussion Exercise 86 Ethical Considerations 86 Critical Analysis Job Satisfaction in the UAE 86 Research Exercise 87 4 Perception and Individual Decision Making 89 What Is Perception? 90 Factors That Influence Perception 90 Person Perception: Making Judgments About Others 91 Attribution Theory 91 • Frequently Used Shortcuts in Judging Others 93 • Specific Applications of Shortcuts in Organizations 94 The Link Between Perception and Individual Decision Making 95 Decision Making in Organizations 96 The Rational Model, Bounded Rationality, and Intuition 96 • Common Biases and Errors in Decision Making 97 A01_ROBB9658_15_SE_FM.indd 15 7/31/12 5:48 PM xvi Contents Influences on Decision Making: Individual Differences and Organizational Constraints 100 Individual Differences 100 • Organizational Constraints 102 What About Ethics in Decision Making? 103 Three Ethical Decision Criteria 103 • Improving Creativity in Decision Making 104 Global Implications 106 Summary and Implications for Managers 107 Self-Assessment Library What’s My Attitude Toward Older People? 90 International OB How Culture Influences Decision Making 98 Self-Assessment Library Am I a Deliberate Decision Maker? 100 OB in the News inJAz Bahrain’s Business Ethics Program 101 Self-Assessment Library How Creative Am I? 106 Point/Counterpoint When In Doubt, Do! 109 Questions for Review 109 Discussion Exercise 109 Ethical Considerations 110 Critical Analysis Decision Making Processes at Steel Inc. 110 Research Exercise 111 5 Motivation: Concepts and Applications 113 Defining Motivation 114 Early Theories of Motivation 115 Hierarchy of Needs Theory 115 • Theory X and Theory Y 116 • Two-Factor Theory 117 • McClelland’s Theory of Needs 118 Contemporary Theories of Motivation 118 Cognitive Evaluation Theory 119 • Goal-Setting Theory 121 • Self-Efficacy Theory 123 • Reinforcement Theory 124 • Equity Theory 125 • Expectancy Theory 128 Motivating by Job Design: The Job Characteristics Model 129 The Job Characteristics Model 129 • How Can Jobs Be Redesigned? 131 • Alternative Work Arrangements 133 Employee Involvement 136 Examples of Employee Involvement Programs 136 • Linking Employee Involvement Programs and Motivation Theories 137 Using Rewards to Motivate Employees 137 What to Pay: Establishing a Pay Structure 138 • How to Pay: Rewarding Individual Employees through Variable-Pay Programs 138 • Flexible Benefits: Developing a Benefits Package 140 • Intrinsic Rewards: Employee Recognition Programs 141 Global Implications 144 Summary and Implications for Managers 146 A01_ROBB9658_15_SE_FM.indd 16 7/31/12 5:48 PM Contents xvii Self-Assessment Library How Confident Am I in My Abilities to Succeed? 114 International OB Motivation and Culture: What’s the Relationship? 120 Self-Assessment Library What Are My Course Performance Goals? 122 OB in the News What Motivates Employees? 126 Self-Assessment Library What’s My Job’s Motivating Potential? 128 Point/Counterpoint Praise Motivates 147 Questions for Review 147 Discussion Exercise 148 Ethical Considerations 148 Critical Analysis Reducing Travel Costs at Applebee’s 148 Research Exercise 149 6 Emotions and Moods 151 What Are Emotions and Moods? 152 The Basic Emotions 154 • The Basic Moods: Positive and Negative Affect 155 • The Function of Emotions 156 • Sources of Emotions and Moods 157 Emotional Labor 160 Affective Events Theory 161 Emotional Intelligence 162 The Case for EI 163 • The Case Against EI 164 OB Applications of Emotions and Moods 165 Selection 165 • Decision Making 165 • Creativity 166 • Motivation 166 • Leadership 167 • Negotiation 167 • Customer Service 168 • Job Attitudes 168 • Deviant Workplace Behaviors 168 • How Managers Can Influence Moods 168 Global Implications 169 Does the Degree to Which People Experience Emotions Vary Across Cultures? 169 • Do Peoples’ Interpretations of Emotions Vary Across Cultures? 170 • Do the Norms for the Expression of Emotions Differ Across Cultures? 170 Summary and Implications for Managers 170 Self-Assessment Library How Are You Feeling Right Now? 152 Self-Assessment Library What’s My Affect Intensity? 157 International OB Emotional Recognition: Universal or Culture Specific? 159 Self-Assessment Library What’s My Emotional Intelligence Score? 165 OB in the News Crying at Work Gains Acceptance 169 Point/Counterpoint The Costs and Benefits of Organizational Display Rules 172 Questions for Review 172 Discussion Exercise 173 Ethical Considerations 173 Critical Analysis Happiness: Just an Emotion! 173 Research Exercise 174 A01_ROBB9658_15_SE_FM.indd 17 7/31/12 5:48 PM xviii 3 7 Contents The Group Foundations of Group Behavior 177 Defining and Classifying Groups 178 Stages of Group Development 180 The Five-Stage Model 180 • An Alternative Model for Temporary Groups with Deadlines 181 Group Properties: Roles, Norms, Status, Size, and Cohesiveness 181 Group Property 1: Roles 181 • Group Properties 2 and 3: Norms and Status 184 • Group Property 4: Size 189 • Group Property 5: Cohesiveness 190 Group Decision Making 191 Groups versus the Individual 192 • Groupthink and Groupshift 193 • Group Decision Making Techniques 195 Global Implications 197 Summary and Implications for Managers 198 Self-Assessment Library What’s My Attitude Toward Working in Groups? 178 Self-Assessment Library Do I Trust Others? 184 International OB Group Cohesiveness Across Cultures 191 OB in the News Groupthink for an Enron Jury? 194 Point/Counterpoint Are Groups the Best Design? 200 Questions for Review 201 Discussion Exercise 201 Ethical Considerations 201 Critical Analysis If Two Heads Are Better than One, Are Four Even Better? 201 Research Exercise 202 8 Understanding Work Teams 205 Why Have Teams Become So Popular? 206 Differences between Groups and Teams 207 Types of Teams 208 Problem-Solving Teams 208 • Self-Managed Work Teams 209 • Cross-Functional Teams 209 • Virtual Teams 210 Creating Effective Teams 211 Context: What Factors Determine whether Teams Are Successful 211 • Team Composition 213 • Work Design 217 • Team Processes 217 Turning Individuals into Team Players 219 Beware! Teams Aren’t Always the Answer 221 Global Implications 222 A01_ROBB9658_15_SE_FM.indd 18 7/31/12 5:48 PM xix Contents Summary and Implications for Managers 223 Self-Assessment Library How Good Am I at Building and Leading a Team? 206 International OB Global Virtual Teams 210 OB in the News Surgical Teams Lack Teamwork 213 Self-Assessment Library What Is My Team Efficacy? 219 Point/Counterpoint Sports Teams Are Good Models for Workplace Teams 224 Questions for Review 225 Discussion Exercise 225 Ethical Considerations 225 Critical Analysis Team Effectiveness in Egypt 226 Research Exercise 226 9 Communication 229 Functions of Communication 230 The Communication Process 231 Direction of Communication 232 Downward Communication 232 • Upward Communication 233 • Lateral Communication 233 Interpersonal Communication 234 Oral Communication 234 • Written Communication 235 • Nonverbal Communication 236 Organizational Communication 237 Formal Small-Group Networks 237 • The Grapevine 238 • Electronic Communications 239 • Knowledge Management 243 Choice of Communication Channel 245 Barriers to Effective Communication 246 Filtering 246 • Selective Perception 246 • Information Overload 247 • Emotions 247 • Language 247 • Communication Apprehension 247 • Gender Differences 248 • ‘Politically Correct’ Communication 248 Global Implications 249 Cultural Barriers 249 • Cultural Context 250 • A Cultural Guide 251 Summary and Implications for Managers 252 Self-Assessment Library What’s My Face-to-Face Communication Style? 230 International OB Cultural Differences in Oral Communication 235 OB in the News Communication in the Arab World 244 International OB Lost in Translation? 250 Self-Assessment Library How Good Are My Listening Skills? 252 Point/Counterpoint Keep It a Secret 253 Questions for Review 253 Discussion Exercise 254 Ethical Considerations 254 Critical Analysis The Limitations of Electronic Communication 254 Research Exercise 255 A01_ROBB9658_15_SE_FM.indd 19 7/31/12 5:48 PM xx Contents 10 Leadership 257 What Is Leadership? 259 Trait Theories 260 Behavioral Theories 261 Ohio State Studies 262 • University of Michigan Studies 262 • Summary of Trait Theories and Behavioral Theories 262 Contingency Theories: Fiedler Model and Situational Leadership Theory 263 Fiedler Model 263 • Hersey and Blanchard’s Situational Theory 265 • Path-Goal Theory 265 • Path-Goal Variables and Predictions 266 • Summary of Contingency Theories 267 Leader–Member Exchange (LMX) Theory 267 Decision Theory: Vroom and Yetton’s Leader-Participation Model 268 Inspirational Approaches to Leadership 268 Charismatic Leadership 269 • Transformational Leadership 271 Authentic Leadership: Ethics and Trust Are the Foundation of Leadership 274 What Is Authentic Leadership? 275 • Ethics in Leadership and Corporate Social Responsibility 275 • What Is Trust? 276 • Trust and Leadership 276 • Three Types of Trust 277 • Basic Principles of Trust 277 Contemporary Leadership Roles 278 Mentoring 278 • Self-Leadership 279 • Online Leadership 279 Challenges to the Leadership Construct 280 Leadership as an Attribution 280 • Substitutes for and Neutralizers of Leadership 281 Finding and Creating Effective Leaders 282 Selecting Leaders 282 • Training Leaders 282 Global Implications 283 Summary and Implications for Managers 284 Self-Assessment Library What’s My Leadership Style? 258 OB in the News Riding the Waves Requires Leadership Skill! 261 Self-Assessment Library What Is My LPC Score? 264 Self-Assessment Library How Charismatic Am I? 269 Self-Assessment Library Am I an Ethical Leader? 275 International OB Cultural Variation in Charismatic Attributions 280 Point/Counterpoint Leaders Are Born, Not Made 286 Questions for Review 286 Discussion Exercise 287 Ethical Considerations 287 Critical Analysis Cultural Variation in Charismatic Attributions 287 Research Exercise 287 A01_ROBB9658_15_SE_FM.indd 20 7/31/12 5:48 PM xxi Contents 11 Power and Politics 289 A Definition of Power 290 Contrasting Leadership and Power 291 Bases of Power 291 Formal Power 291 • Personal Power 292 • Which Bases of Power Are Most Effective? 293 Dependency: The Key to Power 294 What Creates Dependency? 294 Power Tactics 295 Sexual Harassment: Unequal Power in the Workplace 297 Politics: Power in Action 299 Definition of Organizational Politics 299 • The Reality of Politics 300 Causes and Consequences of Political Behavior 301 Factors Contributing to Political Behavior 301 • How Do People Respond to Organizational Politics? 304 • Impression Management 306 The Ethics of Behaving Politically 308 Global Implications 309 Politics Perceptions 309 • Preference for Power Tactics 309 • Effectiveness of Power Tactics 310 Summary and Implications for Managers 310 Self-Assessment Library Is My Workplace Political? 290 International OB Influence Tactics in China 297 Self-Assessment Library How Good Am I at Playing Politics? 306 OB in the News Excuses Are Everywhere 308 Point/Counterpoint Managing Impressions Is Unethical 311 Questions for Review 311 Discussion Exercise 312 Ethical Considerations 312 Critical Analysis The Politics of Backstabbing 312 Research Exercise 313 12 Conflict and Negotiation 315 A Definition of Conflict 316 Transitions in Conflict Thought 317 The Traditional View of Conflict 317 • The Human Relations View of Conflict 317 • The Interactionist View of Conflict 317 The Conflict Process 318 Stage I: Potential Opposition or Incompatibility 318 • Stage II: Cognition and Personalization 320 • Stage III: Intentions 321 • Stage IV: Behavior 322 • Stage V: Outcomes 322 A01_ROBB9658_15_SE_FM.indd 21 7/31/12 5:48 PM xxii Contents Negotiation 325 Bargaining Strategies 325 • The Negotiation Process 328 • Individual Differences in Negotiation Effectiveness 329 • Third-Party Negotiations 331 Global Implications 333 Conflict and Culture 333 • Cultural Differences in Negotiations 333 Summary and Implications for Managers 334 Self-Assessment Library What’s My Preferred Conflict-Handling Style? 316 Self-Assessment Library What’s My Negotiating Style? 331 International OB Negotiating Across Cultures 331 OB in the News ‘Marriage Counseling’ for the Top Bosses 332 Point/Counterpoint Conflict Benefits Organizations 336 Questions for Review 336 Discussion Exercise 337 Ethical Considerations 337 Critical Analysis Etisalat-Zain Deal Blocked 337 Research Exercise 337 4 The Organization System 13 Foundations of Organizational Structure 341 What Is Organizational Structure? 342 Work Specialization 342 • Departmentalization 343 • Chain of Command 344 • Span of Control 345 • Centralization and Decentralization 346 • Formalization 346 Common Organizational Designs 347 The Simple Structure 348 • The Bureaucracy 348 • The Matrix Structure 350 New Design Options 351 The Virtual Organization 351 • The Boundaryless Organization 353 Why Do Structures Differ? 354 Strategy 355 • Organization Size 355 • Technology 356 • Environment 357 Organizational Designs and Employee Behavior 358 Global Implications 360 Summary and Implications for Managers 361 Self-Assessment Library Do I Like Bureaucracy? 342 Self-Assessment Library How Willing Am I to Delegate? 346 A01_ROBB9658_15_SE_FM.indd 22 7/31/12 5:48 PM Contents xxiii OB in the News Siemens Simple Structure—Not 347 International OB Structural Considerations in Multinationals 349 Point/Counterpoint Downsizing Improves Organizational Performance 362 Questions for Review 362 Discussion Exercise 363 Ethical Considerations 363 Critical Analysis Organizational Structure at Food & Co. 363 Research Exercise 363 14 Organizational Culture 365 Institutionalization: A Forerunner of Culture 366 What Is Organizational Culture? 367 A Definition of Organizational Culture 367 • Culture Is a Descriptive Term 367 • Do Organizations Have Uniform Cultures? 368 • Strong versus Weak Cultures 369 • Culture versus Formalization 369 What Do Cultures Do? 370 Culture’s Functions 370 • Culture as a Liability 371 Creating and Sustaining Culture 372 How a Culture Begins 372 • Keeping a Culture Alive 373 • Summary: How Cultures Form 375 How Employees Learn Culture 376 Stories 376 • Rituals 376 • Material Symbols 376 • Language 377 Creating an Ethical Organizational Culture 378 Creating a Positive Organizational Culture 379 Spirituality and Organizational Culture 380 What Is Spirituality? 380 • Why Spirituality Now? 380 • Characteristics of a Spiritual Organization 381 • Criticisms of Spirituality 382 Global Implications 383 Summary and Implications for Managers 383 Self-Assessment Library What’s the Right Organizational Culture for Me? 366 International OB Managing Across Organizational Boundaries 370 OB in the News Change Jobs, and You May Be in for a Culture Shock 377 Self-Assessment Library How Spiritual Am I? 381 Point/Counterpoint Organizational Cultures Can’t Be Changed 385 Questions for Review 385 Discussion Exercise 386 Ethical Considerations 386 Critical Analysis Ghosn Turns Nissan Around 386 Research Exercise 387 A01_ROBB9658_15_SE_FM.indd 23 7/31/12 5:48 PM xxiv Contents 15 Human Resource Policies and Practices in the Arab World 389 Human Resource Management Societies 391 The Recruitment Process 392 Selection Practices 393 How the Selection Process Works 393 • Initial Selection 394 • Substantive Selection 394 • Contingent Selection 395 Training and Development Programs 396 Types of Training 397 • Training Methods 398 • Individualizing Formal Training to Fit the Employee’s Learning Style 399 • Evaluating Effectiveness of Training Programs 399 Performance Evaluation 401 Purposes of Performance Evaluation 401 • What Do We Evaluate? 402 • Who Should Do the Evaluating? 403 • Methods of Performance Evaluation 403 • Providing Performance Feedback 405 • Suggestions for Improving Performance Evaluations 405 Managing Diversity in Organizations 406 Work–Life Conflicts 408 • Diversity Training 410 Global Implications 410 Selection 410 • Performance Evaluation 411 Summary and Implications for Managers 412 Self-Assessment Library How Much Do I Know About HRM? 391 International OB Cultural Training 398 OB in the News Awareness of Human Capital From Within: ‘Project Emiratization’ 400 Self-Assessment Library How Good Am I at Giving Performance Feedback? 406 Point/Counterpoint Telecommuting Makes Good Business Sense 414 Questions for Review 415 Discussion Exercise 415 Ethical Considerations 415 Critical Analysis So7i Wa Sari3 415 Research Exercise 416 5 Organization Dynamics 16 Organizational Change and Stress Management 419 Forces for Change 420 Planned Change 422 Resistance to change 423 Overcoming Resistance to Change 423 • The Politics of Change 425 A01_ROBB9658_15_SE_FM.indd 24 7/31/12 5:48 PM Contents xxv Approaches to Managing Organizational Change 426 Lewin’s Three-Step Model 426 • Kotter’s Eight-Step Plan for Implementing Change 426 • Action Research 427 • Organizational Development 428 Creating a Culture for Change 430 Stimulating a Culture of Innovation 430 • Creating a Learning Organization 431 Work Stress and Its Management 433 What Is Stress? 433 • Potential Sources of Stress 434 • Individual Differences 436 • Emotional Intelligence and Stress 436 • Consequences of Stress 437 • Managing Stress 438 Global Implications 440 Summary and Implications for Managers 441 Self-Assessment Library How Well Do I Respond to Turbulent Change? 420 Self-Assessment Library How Stressful Is My Life? 436 OB in the News The Ten Most Stressful Jobs—and One More That Didn’t Make the List 437 International OB Coping with Stress: Cultural Differences 439 Point/Counterpoint Managing Change is an Episodic Activity 442 Questions for Review 442 Discussion Exercise 443 Ethical Considerations 443 Critical Analysis Embracing Change Through Operational Leadership 443 Research Exercise 444 17 Organizational Behavior in the Family Business 447 What Is a Family Business? 448 Definitions of the Family Business 450 • Statistics about the Family Business 451 • Planning the Family Business 451 • Organizational Structure of the Family Business 452 The Characteristics of the Family Business 454 Organizational Behavior in the Family Business 454 Family Businesses Are Dominant in the Arab World 456 The Family Business in the Arab World 457 Advantages of the Family Business 459 Disadvantages of the Family Business 460 The Succession Plan 461 How and When Should the Business Be Transferred? 461 • Family Business Continuity 462 The Future of the Family Business 463 Global Implications 464 Summary and Implications for Managers 465 Self-Assessment Library Am I Experiencing Work/Family Conflict? 448 OB in the News The Family Business: The Foundation of Arab World Success 455 International OB Globalization: The Direction of Arab Family Businesses 458 Point/Counterpoint Is Structure Needed? 466 A01_ROBB9658_15_SE_FM.indd 25 7/31/12 5:48 PM xxvi Contents Questions for Review 466 Discussion Exercise 466 Ethical Considerations 467 Critical Analysis From London to Lebanon 467 Research Exercise 468 6 Specifics in OB 18 Intercultural Management: The Significance to Organizational Behavior 471 What Is Intercultural Management? 472 Hofstede’s Cultural Dimensions 473 • Hofstede’s Dimensions and the Arab World 474 • Managing Diversity 474 What Do Intercultural Managers Do? 474 Intercultural Managers’ Competencies 474 • Cultural Awareness Framework 476 • The Intercultural Manager as a Problem Solver 477 • The Intercultural Manager as a Negotiator 478 The Significance of Communication for the Intercultural Manager 479 High versus Low Culture Contexts 480 • How to Enhance Communication 481 The Intercultural Manager as Global Manager 482 Corporate Culture 484 • Foreign Labour 484 Domains of International Business Practice 485 Cross-Cultural Training 485 Global Implications 486 Summary and Implications for Managers 487 Self-Assessment Library Am I Well-Suited for a Career as a Global Manager? 472 OB in the News Yahoo! Talks Arabic; Maktoob Talks English! 481 International OB Intercultural Action at Hillcrest! 483 Point/Counterpoint “When in Rome, Do as the Romans Do” 488 Questions for Review 488 Discussion Exercise 488 Ethical Considerations 489 Critical Analysis What’s Trust Got to Do with It? 489 Research Exercise 490 A01_ROBB9658_15_SE_FM.indd 26 7/31/12 5:48 PM Contents 19 xxvii Female Entrepreneurs in the Arab World 491 The Need for Women in the Workplace 492 Characteristics of Entrepreneurs 492 • Growth of Women-Owned Businesses in the Arab World 493 The Role of Women in Business 494 The Female Entrepreneur in the Arab World 495 Motivation 497 Successful Female Entrepreneurs 497 The Barriers for Women in the Arab World 498 Low Income 499 • Glass Ceiling 500 • Gender Discrimination 500 • Time Shifts 500 • Nepotism 500 • Other Challenges 501 How Do Males React to Successful Females? 502 Stereotypes Can Be Broken: Time for Change 503 Global Implications 504 Summary and Implications for Managers 505 Self-Assessment Library What Are My Gender Role Perceptions? 492 International OB The World Supports the Middle Eastern Woman 501 OB in the News Female Leaders in Business 503 Point/Counterpoint Females Can Find a Balance 506 Questions for Review 506 Discussion Exercise 506 Ethical Considerations 507 Critical Analysis No Matter What, the Boardroom Is Still Off Limits to Females! 507 Research Exercise 508 Appendix A   Research in Organizational Behavior Comprehensive Cases 509 516 Case 1 Being Lean, Not Mean 516 Case 2 She Loves a Challenge! 518 Case 3 A New Way to Change 520 Case 4 What a Strange Man! 521 Case 5 A Question of Motivation 523 Case 6 The Big Promotion 524 Credits 527 Endnotes 528 Glossary 570 Index 582 A01_ROBB9658_15_SE_FM.indd 27 7/31/12 5:48 PM A01_ROBB9658_15_SE_FM.indd 28 7/31/12 5:48 PM Foreword This book has been the world’s No. 1 best-selling organizational behavior textbook for nearly three decades. It has sold in excess of three million copies, been translated into 10 different languages, and has adapted editions published for Europe, Canada, Australia, South Africa, and the Philippines. It is with great pride that we introduce this Arab World Edition. I think you will find this book will provide the latest research in organizational behavior, written in an interesting and conversational style, with examples that make it relevant to Arab World students. Most importantly, this book will provide you with the relevant knowledge and skills needed for managing and working with people in diverse organizations. Stephen P. Robbins, Ph.D. and Timothy A. Judge, Ph.D. xxix A01_ROBB9658_15_SE_FM.indd 29 7/31/12 5:48 PM A01_ROBB9658_15_SE_FM.indd 30 7/31/12 5:48 PM Preface Welcome to the first Arab World Edition of Organizational Behavior! Pearson has pioneered this project with the aim of highlighting the practices of organizational behavior in organizations within the Arab world. This edition is addressed to both undergraduate and graduate students of the region, with the goal of making relevant research come alive for students. This textbook covers several themes and topics that are related to organizational behavior in general and in particular to organizational behavior in the Arab world. While maintaining many of the hallmark features, we have also introduced new features. These special features will enable you to understand certain issues much better, and also provide a smooth transition from one chapter to another. The writing style, level of English, and pedagogy have been carefully considered to meet the needs of students in the Arab world. The most significant aspect of this edition is the introduction of many examples, cases, incidents, and illustrations talking about people, companies, and organizations that are well known in both the industry and services domain throughout the Arab world. Examples are taken from the Gulf Cooperation Council (GCC), the Levant, North Africa, Turkey, and Cyprus. This Arab World Edition reflects the attitudes and behavioral patterns of employers and em­ ployees in many of the prominent organizations across the Arab world, while examples from other countries provide a global context. Organization Part 1 introduces the concept of organizational behavior (OB). It looks at the skills that managers need to be successful and to get the job done. It also explains the various disciplines of OB as well as the challenges and opportunities it presents to both employers and employees. Part 2 speaks about individuals and how they should behave within the organization by explaining the reasons why people behave in certain ways. This part looks at the personality, values, attitudes, emotions, and moods of individuals. Once we understand these, we can identify how to satisfy and motivate people for greater productivity. Part 3 deals with group behavior by explaining the importance of working in teams. We must realize that leaders need excellent communication skills to interact with different types of people. The other organizational issues covered in this section are power, politics, conflict, and negotiation. Part 4 covers the basics of organizational structure and corporate culture. In addition, it explains the HR policies and practices that are practiced in the Arab world. Part 5 speaks about organizational dynamics by looking at the challenges of change and stress, and the nature of the family business which is common in the Arab world. Finally, Part 6 looks at intercultural management and how it affects organ­ izational behavior. It also addresses the role that women are starting to play in business and how they are contributing to organizational behavior. xxxi A01_ROBB9658_15_SE_FM.indd 31 7/31/12 5:48 PM xxxii Preface Key Changes to the Arab World Edition Arab World Cases and Trends Each chapter has been carefully adapted to include regional case studies and examples, connecting the theory of organizational behaviour with real Arab companies and people that students will be able to relate to. These include: Opening Vignettes l The Strength of General Electric in the Arab World (Chapter 1) l What Do Arabs Think About Arabs? (Chapter 4) l Facebook Dominates in the Arab World (Chapter 9) l Al-Wasta (Chapter 11) l Aramex—Empowerment Through Organizational Structure (Chapter 13) l The Culture at Arab World Companies (Chapter 14) l Human Resource Policy at Azadea (Chapter 15) l Family Business Success Stories from the Region: The Habtoor Empire (Chapter 17) l A Sheikha and a Queen (Chapter 19) Critical Analyses l Equal opportunity at Crepaway (Chapter 1) l Qatar: A Country with a Vision (Chapter 2) l Job satisfaction in the UAE (Chapter 3) l Team Effectiveness in Egypt (Chapter 8) l Etisalat-Zain Deal Blocked (Chapter 12) l Organizational Structure at Food & Co. (Chapter 13) l So7i Wa Sari3 (Chapter 15) l From London to Lebanon (Chapter 17) Photo Cases l Saudi Aramco (Chapter 1) l Qatari Business Women’s Forum (Chapter 2) l Etihad Airways (Chapter 6) l Mobinil (Chapter 9) l SABIC (Chapter 9) l Sheikh Zayad bin Sultan Al Nahayan (Chapter 10) l Qatar International Islamic Bank (QIIB) (Chapter 12) l Etisalat (Chapter 13) l Ritz Carlton, Oman (Chapter 14) l The Tharawat Family Business Forum (Chapter 17) New Features l l l l A01_ROBB9658_15_SE_FM.indd 32 Two new features—What Do You Think? and Picture This—allow students to get more involved in the process and interact in class. End-of-chapter features have been changed to Discussion Exercise, Ethical Considerations, Critical Analysis and Research Exercise. These hands-on, in-class exercises are included in each chapter, along with material in the Instructor’s Manual that will make for unique and entertaining exercises to highlight a key chapter concept. OB in the News, International OB and Point/CounterPoint features have been adapted to include examples from the Arab region. The Arab World Edition benefits from the addition of an English–Arabic glossary for quick, easy reference, and to aid students’ understanding of key terms throughout the book. 7/31/12 5:48 PM Preface xxxiii New Chapters The Arab World Edition contains three brand new chapters on topics that are particularly relevant to this part of the world: l l l Organizational Behavior in the Family Business (Chapter 17). Intercultural Management: The Significance to Organizational Behavior (Chapter 18). Female Entrepreneurs in the Arab World (Chapter 19). Teaching and Learning Support Mymanagementlab (www.pearsonmiddleeastawe.com/robbinsjudge) is an easyto-use online tool that personalizes course content and provides robust assessment and reporting to measure student and class performance. All the resources you need for course success are in one place—flexible and easily adapted for your course experience. Resources include a Pearson eText (an eBook version of all chapters), quizzes, personalized study plans, video clips, and PowerPoint presentations, all of which engage students while helping them to study independently. In particular, mymanagementlab supports more active learning styles, involving students as they study management and prepare for tests and quizzes. Mymanagementlab also contains key video, testing, and other support resources that offer instructors many ways to enliven their classroom and save time—all in one convenient place. Instructor’s Resource Center At www.pearsonmiddleeastawe.com/robbinsjudge, instructors can access a variety of print, digital, and presentation resources available with this text in downloadable format. Registration is simple and gives you immediate access to new titles and new editions. As a registered faculty member, you can download resource files and receive immediate access and instructions for installing course management content on your campus server. If you need assistance, our dedicated technical support team is ready to help with the media supplements that accompany this text. Visit http://247pearsoned.custhelp.com for answers to frequently asked questions, and toll-free user support phone numbers, and live chat support. The following fully adapted supplements are available to adopting instructors: l l l l A01_ROBB9658_15_SE_FM.indd 33 Instructor’s Manual—Provides ideas and resources in the classroom Test Item File—Revised and updated from previous editions to include Arab examples, the test item file contains over 2,500 questions that require students to apply what they have read in the text. Questions are also tagged to reflect the AACSB Learning Standards. TestGen Test Generating Software—Test management software containing all the material from the Test Item File. This software is completely user friendly and allows instructors to view, edit, and add test questions with just a few mouse clicks. PowerPoint Slides—Ready-to-use PowerPoint presentations designed for classroom presentation. Use them as they are, or edit content to fit your individual classroom needs. 7/31/12 5:48 PM xxxiv Preface Self-Assessment Library (S.A.L.) A hallmark of the Robbins series, S.A.L. is a unique learning tool that allows you to assess your knowledge, beliefs, feelings, and actions in regard to a wide range of personal skills, abilities, and interests. Self-assessments have been integrated into each chapter, including a self-assessment at the beginning of each chapter. S.A.L. helps students better understand their interpersonal and behavioral skills as they relate to the theoretical concepts presented in each chapter. Highlights l l l l l l A01_ROBB9658_15_SE_FM.indd 34 67 research-based self-assessments—Our entire collection of 67 instruments are from sources such as Journal of Social Behavior and Personality, Harvard Business Review, Organizational Behavior: Experiences and Cases, Journal of Experimental Education, Journal of Applied Measurement, and others. Work–life and career focused—All self-assessments are focused to help individuals better manage their work lives or careers. Organized in four parts, these instruments offer you one source from which to learn more about yourself. Online—The Self-Assessment Library is available online via MyManagementLab. Save feature—Students can take the self-assessments an unlimited number of times, and save and print their scores for class discussion. Scoring key—The key to the self-assessments has been edited by Steve Robbins to allow students to quickly make sense of the results of their score. Instructor’s manual—An Instructor’s Manual guides instructors in interpreting self-assessments and helps facilitate better classroom discussion. 7/31/12 5:48 PM Acknowledgments Getting this book into your hands was a team effort. It took faculty reviewers and a talented group of designers and production specialists, editorial personnel, and marketing and sales staff. Foremost, I want to thank Stephen P. Robbins and Timothy A. Judge for giving the framework of this pioneer project. I want to salute the genuine contributions, support and cooperation received from the Pearson team: Sophie Bulbrook, Senior Development Editor, and Rasheed Roussan, Acquisitions Editor. Sincere gratitude goes to Fay Gibbons, Editor, for her patience. I would also like to thank Francois S. Hasham and Nafez H. Shahin, for their continuous moral support. Instructors from the Arab world reviewed all chapters in this edition and their comments, compliments, and suggestions have significantly improved the final product. I’d like to extend my sincerest thanks to the following: Mohammed A. Al-Waqfi, United Arab Emirates University Dr. Tamer A. Awad, University College of Bahrain Eman Azmi, King Saud University Dr. Shaju George, Royal University for Women, Bahrain Dr. Adnan Iqbal, Prince Sultan University James T. Kunnanatt, United Arab Emirates University Dr. Penny MacDonald, American University of Kuwait Muhammad A. Malallah, University of Jordan Samer Nakhle, University of Fribourg Adel Rayan, Assiut University, Egypt Nihad Shaker Sakallah, Prince Mohammad Bin Fahd University Additional appreciation goes to all those who contributed material and allowed me to feature cases about them or their companies in this book: Rev. Father Ziad Antoun, Notre Dame University, Lebanon Charbel Aoun, Attorney Nadine Fayad Comair, FOCUS Magazine Kamal Comair, INDEVCO Eric Davoine, University of Fribourg Musa Freiji, Tanmia Bchara Ghawi, So7i Wa Sari3 Amal Harb, Rotana Walid Harb, Tannourine Hospital Anthony S. Hasham, Australian Lebanese Design Services Reine Jabre, So7i Wa Sari3 Olga Kampaxi, Rotana Marwan Kanaan, Zaatar w Zeit Carol-Ann Goff Kfouri, Notre Dame University Claire Kfouri, Engineer The Menhem Family, Damco Joseph Mghames, Azadea Farid Muna, MEIRC Gisele Nacouzi, INDEVCO Samer Nahkle, University of Fribourg Maroun Nassar, Rotana Fay Niewiadomski, ICTN Bassem Sleiman, London Taxi Nelly Sleiman, London Taxi Khaled Tayyara, Zaatar w Zeit Hani Tuffaha, Aramex Monique Bassila Zaarour, So7i Wa Sari3 Finally, this text would not have been possible without the many contributions of reviewers, consultant board members, and accuracy checkers in previous editions. I’d like to thank them all for their valuable insight and suggestions. Elham Hasham xxxv A01_ROBB9658_15_SE_FM.indd 35 7/31/12 5:48 PM A01_ROBB9658_15_SE_FM.indd 36 7/31/12 5:48 PM Learning Objectives This chapter will enable you to: 1 2 3 4 5 Define leadership and contrast leadership and management. Summarize the conclusions of trait theories. 6 7 Identify behavioral theories and their main limitations. Assess contingency theories of leadership by their level of support. Understand the significance of leader–follower participation. 8 9 Define charismatic leadership and show how it influences followers. Contrast transformational leadership and transactional leadership and discuss how transformational leadership works. Define authentic leadership and show why ethics and trust are vital to effective leadership. 10 11 12 Determine the challenges that leaders face. Explain how to find and create effective leaders. Assess whether charismatic and transformational leadership generalize across cultures. Demonstrate the importance of mentoring, self-leadership, and virtual leadership to our understanding of leadership. 256 M10_ROBB9658_15_SE_C10.indd 256 7/31/12 6:47 PM Leadership 10 Great leaders always focus on others, not on themselves. They hire the right people, train them, trust them, respect them, listen to them, and make sure to be there for them. As a result, they get committed people who work hard and give their best because they feel involved, appreciated, and proud of what they do. —Lee Cockerell Visionary Leaders at Meirc Training & Consulting F ounded in Lebanon in 1958 by the late Simon Siksek, Meirc Training & Consulting is one of the leading providers of management training and consulting to organizations throughout the Arab world. The original Middle East Industrial Relations Counselors (Meirc) was sponsored by what were then the four major oil companies in the GCC countries: Saudi Aramco, Bahrain Petroleum Company, Qatar Petroleum Company, and Kuwait Oil Company. Meirc’s raison d’être was to provide up-to-date advice on industrial relations, which later became known as human resources. Gradually, Meirc started serving all types of organizations in all types of industries, in the Middle East and beyond. Values Under the effective leadership of the late Mr. Siksek, the company’s culture emphasized specific work ethics and values, including commitment to excellence, and quality of products and services. Siksek also stressed integrity, innovation, teamwork, and the concept of a ‘Meirc family.’ Each of the five chairmen and managing directors who succeeded him embraced the same set of values and company culture. The current chairman, Dr. Farid A. Muna, continues the legacy and demonstrates extreme competencies that allow him to be successful. Muna appreciates the importance of the people who work with him and respects their qualifications. More significantly, he gives individuals the opportunity to prove their potential and allows them to grow with and for the organization. Vision Mr. Siksek’s original mission was, “To serve the human resources of our region.” This visionary statement evolved over the years and is currently described by these simple, yet powerful, words: “Cultivating professional com­ petence and providing effective business and human capital solutions.” In order to accomplish this vision, Meirc had to work hard, continuously and patiently, to maintain and sustain unique competitive advantages that are difficult for their competitors to copy. Meirc still works relentlessly on several strategic fronts such as people, research, and succession planning. 257 M10_ROBB9658_15_SE_C10.indd 257 7/31/12 6:47 PM 258 CHAPTER 10     Leadership People Farid Muna stresses that Meirc takes seriously the saying that “people are our greatest asset,” and that it can take Meirc a long time (sometimes years) before the right talent is hired. Consultants normally have sig­nificant managerial experience—it is much more effective to teach management skills if one has the hands-on experience of a manager. Additionally, most of Meirc’s con­sultants are multicultural by education or work experience: they have studied or worked in the West, and thus know what works well in the Middle East and what does not. Finally, Meirc strongly believes in the saying that “learning takes place from the cradle to the grave,” and demonstrates it by continually investing in the development of its employees. Research Inspired by the words and actions of Meirc’s founder, Farid Muna continues to promote the practice of con- ducting field research and the subsequent publication of its findings. Muna understands that to remain effective as a leader, one must stay abreast of the latest theories and practices to enhance the employer– employee relationship. Among the several books sponsored by Meirc are Manpower and Oil in Arab Countries (1960); The Arab Executive (1980); and Developing Multicultural Leaders: The Journey to Leadership Success (2011). Succession Planning Critical to the success of Meirc was the well-planned succession of its own managing directors. Under Farid Muna’s consultative style of leadership, the top executives at Meirc established an effective process for succession planning, which should serve the firm for years to come. Source: Case contributed by Dr. Farid A. Muna, Chairman, Meirc Training & Consulting. A s we read in the opening case, Siksek and Muna both demonstrated effective leadership through their display of respect and professionalism. In addition, they believed in their vision and were singleminded in their determination to ensure that Meirc Training & Consulting became the leading provider of management training and consulting to organ­ izations throughout the Arab world. This chapter will discuss all the issues that contri­bute to effective leadership. To assess yourself on another set of qualities that we’ll discuss shortly, take the following self-assessment. What’s My Leadership Style? In the Self-Assessment Library (available online) take assessment II.B.1 (What’s My Leadership Style?) and answer the following questions: 1. How did you score on the two scales? 2. Do you think a leader can be both task-oriented and people-oriented? Do you think there are situations in which a leader has to make a choice between the two styles? 3. Do you think your leadership style will change over time? Why or why not? M10_ROBB9658_15_SE_C10.indd 258 7/31/12 6:47 PM What Is Leadership? 259 In this chapter, we’ll look at the basic approaches to determining what makes an effective leader and what differentiates leaders from nonleaders. First, we’ll present trait theories, which dominated the study of leadership up to the late 1940s. Then we’ll discuss behavioral theories, which were popular until the late 1960s. Next, we’ll introduce contingency theories and interactive theories. Thereafter, we will move on to the issues in leadership such as styles and characteristics in general, and in the Arab world in particular. But before we review any of these, let’s first clarify what we mean by the term leadership. 1 What Is Leadership? Leadership and management are two terms that are often confused. What’s the difference between them? John Kotter of the Harvard Business School argues that management is about coping with complexity.1 Good management brings about order and consistency by presenting formal plans, designing organization structures, and monitoring results against the plans. Leadership, in contrast, is about coping with change. Leaders establish direction by developing a vision of the future; then they align people by communicating this vision and inspiring them to overcome obstacles. Management consists of implementing the vision and strategy provided by leaders, coordinating and staffing the organization, and handling day-to-day problems. We define leadership as the ability to influence a group toward the achievement of a vision or set of goals. The source of this influence may be formal, such as that provided by the possession of managerial rank in an organization. Because management positions come with some degree of formally designated authority, individuals may assume a leadership role because of the position held in the organization. However, not all leaders are managers, nor are all man­ agers leaders. However, leaders can emerge from within a group, as well as by formal appointment, to lead a group. Define leadership and contrast leadership and management. Leadership The ability to influence a group toward the achievement of a vision or set of goals. Carlos Ghosn is multi-cultural and multi-lingual, and has made a great impact as a leader at Michelin Tyres, Renault, and Nissan. In addition to his vision, he has impressive leadership traits, which include respect, diversity tolerance, transparency, and charisma. He is able to establish rapport with employees from all levels of the hierarchy. He considers that the key to success in any career is understanding, and choosing, what you love to do. M10_ROBB9658_15_SE_C10.indd 259 7/31/12 6:47 PM 260 CHAPTER 10     Leadership In brief, organizations need strong leadership and strong management for optimal effectiveness. In today’s dynamic world, we need leaders to challenge the status quo, to create visions of the future, and to inspire organizational members to want to achieve the visions, just as Simon Siksek did in the opening case. We also need managers to formulate detailed plans, create efficient organizational structures, and oversee day-to-day operations. 2 Trait Theories Throughout history, strong leaders such as Napoleon, Gamal Abdel Nasser, and Winston Churchill have been described in terms of their traits with adjectives like confident, strongwilled, determined, charismatic, and decisive. Trait theories of leadership differentiate leaders from nonleaders by focusing on personal qualities and characteristics. Individuals are recognized as leaders and described in terms such as charismatic, enthusiastic, and courageous. The search for personality, social, physical, or intellectual attributes that would describe leaders and differentiate them from nonleaders goes back to the earliest stages of leadership research. Researchers began organizing traits around the Big Five personality framework that was discussed in Chapter 2.2 It then became clear that most of the dozens of traits emerging in various leadership reviews could be found under one of the Big Five and this approach resulted in consistent and strong support for traits as predictors of leadership. For instance, ambition and energy—two common traits of leaders—are part of extraversion. Rather than focus on these two specific traits, it is better to think of them in terms of the more general trait of extraversion. Conscientiousness and openness to experience also showed strong and consistent relationships to leadership, though not quite as strong as extraversion. The traits of agreeableness and emotional stability weren’t as strongly correlated with leadership. Overall, it does appear that the trait approach does have something to offer. In other words, leaders who are extraverted (individuals who like being around people and are able to assert themselves), conscientious (individuals who are disciplined and keep commitments they make), and open (individuals who are creative and flexible) do seem to have an advantage when it comes to leadership, suggesting that good leaders do have key traits in common. Summarize the conclusions of trait theories. Trait theories of leadership Theories that consider personal qualities and characteristics that differentiate leaders from nonleaders. What Do You Think? Do you have the characteristics and traits of a good leader? Do you feel you have had them from birth or did you learn them? Moreover, recent studies are indicating that another trait that may indicate effective leadership is emotional intelligence (EI), which we discussed in Chapter 6. Supporters of EI argue that without it, a person can have outstanding training, a highly analytical mind, a compelling vision, and an endless supply of terrific ideas, but still not make a great leader. But why is EI so critical to effective leadership? A core component of EI is empathy. Empathetic or sensitive leaders can understand others’ needs, listen to what followers say (and don’t say), and are able to read the reactions of others. As one leader noted, “The caring part of empathy, especially for the people with whom you work, is what inspires people to stay with a leader when the going gets rough. The mere fact that someone cares is more often than not rewarded with loyalty.”3 M10_ROBB9658_15_SE_C10.indd 260 7/31/12 6:47 PM 261 Behavioral Theories OB in the News Riding the Waves Requires Leadership Skill! T he extraordinary competence, vision, and leadership skills of the Governor of the Central Bank of Lebanon, Mr. Riad Salameh, enabled Lebanon to be less affected by the 2008 global financial crisis. It managed to stay abreast of the emergency and, thus, was not negatively influenced by the monetary turbulence. Salameh’s keen observations and awareness of the local, regional, and international economy allowed him to lead the banking sector through those threatening times: As of November 26, 2008, Central Bank Governor Riad Salameh announced that the combined assets of Lebanese banks totaled over US$100 billion—four times the country’s GDP. Lebanese bankers agree that the central bank takes pride in shying away from complex investments and structured products that it does not understand. Despite the severe challenges of the economic downturn worldwide, the Lebanese banking sector has demonstrated resiliency and dynamism, apparently weathering the storm. Whilst international markets were struggling with the credit crunch and the high interbank interest rates of October 2008, Lebanese banks acted proactively in lending their ample liquidity to foreign financial institutions, and gaining high returns As a result of Salameh’s leadership and his ability to guide the banking sector to safe shores, his position as Central Bank Governor was once again renewed in 2011. Sources: M. Mikhael, “Lebanon Basks in the Calm Eye of the Financial Storm,” Executive Magazine, Issue No. 114 (2009); “Lebanon—Banked for the Storm,” Executive Magazine, Issue No. 115 (2009). Consequently, we offer two conclusions. First, traits can predict leadership and the Big Five seems to have supported that. Second, traits do a better job at predicting the emergence of leaders and the appearance of leadership than in actually distinguishing between effective and ineffective leaders.4 3 Behavioral Theories The discrepancies of early trait studies led researchers to start looking at the behaviors exhibited by specific leaders. They wondered if there was something different in the way that effective leaders behave. Many leaders have been very successful in leading their companies through difficult times.5 And they have relied on a common leadership style that is tough-talking, intense, and autocratic. Does this suggest that autocratic behavior is a preferred style for all leaders? In this section, we look at three different behavioral theories of leadership to answer that question. First, however, let’s consider the practical implications of the behavioral approach. If the behavioral approach to leadership were successful, it would have implications quite different from those of the trait approach. Trait research provides a basis for selecting the ‘right’ persons to assume formal positions in groups and organizations requiring leadership. In contrast, if behavioral studies were to turn up critical behavioral determinants of leadership, we could train people to be leaders. The difference between trait and behavioral theories, in terms of application, lies in their underlying assumptions. Trait theories assume that leaders are born rather than made. However, if there were specific behaviors that identified leaders, then we could teach leadership; we could design programs that implanted these behavioral patterns in individuals who desired to be effective leaders. Identify behavioral theories and their main limitations. Behavioral theories of leadership Theories proposing that specific behaviors differentiate leaders from nonleaders. M10_ROBB9658_15_SE_C10.indd 261 7/31/12 6:47 PM 262 CHAPTER 10     Leadership Ohio State Studies Initiating structure The extent to which a leader is likely to define and structure his or her role and those of subordinates in the search for goal attainment. Consideration The extent to which a leader is likely to have job relationships characterized by mutual trust, respect for subordinates’ ideas, and regard for their feelings. The most comprehensive of the behavioral theories resulted from research that began at Ohio State University, in the US, in the late 1940s.6 Researchers wanted to identify independent dimensions of leader behavior and narrowed the list to two categories that were responsible for most of the leadership behavior described by employees. They called these two dimensions initiating structure and consideration. Initiating structure refers to the extent to which leaders define and structure their role and those of employees in the search for goal attainment. It includes behavior that attempts to organize work, work relationships, and goals. A leader characterized as high in initiating structure could be described as someone who ‘assigns group members to particular tasks, expects workers to maintain definite standards of performance, and emphasizes the meeting of deadlines.’ Consideration is described as the extent to which individuals are likely to have job relationships that are characterized by mutual trust, respect for employees’ ideas, and regard for their feelings. We could describe a leader high in consideration as one who helps employees with personal problems, is friendly and approachable, treats all employees as equals, and expresses appreciation and support. University of Michigan Studies Employee-oriented leader A leader who emphasizes interpersonal relations, takes a personal interest in the needs of employees, and accepts individual differences among members. Production-oriented leader A leader who emphasizes technical or task aspects of the job. Managerial grid A nine-by-nine matrix outlining 81 different leadership styles. Leadership studies undertaken in the US at the University of Michigan’s Survey Research Center at about the same time as those being done at Ohio State had similar research objectives: to locate behavioral characteristics of leaders that appeared to be related to measures of performance effectiveness. The Michigan group also came up with two dimensions of leadership behavior that they labeled employee oriented and production oriented.7 The employee-oriented leaders were described as emphasizing interpersonal relations; they took a personal interest in the needs of their employees and accepted individual differences among members. The production-oriented leaders, in contrast, tended to emphasize the technical or task aspects of the job; their main concern was in accomplishing their group’s tasks, and the group members were a means to that end. The conclusions the Michigan researchers arrived at strongly supported the leaders who were employee-oriented in their behavior. Employee-oriented leaders were associated with higher group productivity and greater job satis­ faction. Production-oriented leaders tended to be associated with low group productivity and lower job satisfaction. Referring to both the Ohio State and Michigan studies, Robert R. Blake and Jane S. Mouton designed a managerial grid (sometimes called the leadership grid ) based on the styles of concern for people and concern for produc­tion, which essentially represent the Ohio State dimensions of con­sideration and initiating structure or the Michigan dimensions of employee oriented and production oriented.8 The grid, shown in Figure 10-1, has 9 possible positions along each axis, creating 81 different positions in which the leader’s style may fall. The grid does not show results produced; rather, it shows the dominating factors in a leader’s thinking in regard to getting results. Based on the findings of Blake and Mouton, managers were found to perform best under a 9,9 style, as contrasted, for example, with a 9,1 (authority type) or 1,9 (laissez-faire or flexible type) style.9 Summary of Trait Theories and Behavioral Theories Judging from the evidence, the behavioral theories, like the trait theories, add to our understanding of leadership effectiveness. Leaders who have certain M10_ROBB9658_15_SE_C10.indd 262 7/31/12 6:47 PM 263 Contingency Theories: Fiedler Model and Situational Leadership Theory Figure 10-1 The Managerial Grid traits and who display consideration and structuring behaviors, do appear to be more effective. We should remember, however, that as important as trait theories and behavioral theories are in determining effective versus ineffective leaders, they do not guarantee a leader’s success. The context matters too. Contingency Theories: Fiedler Model and Situational Leadership Theory 4 Predicting leadership success is more complex than isolating a few traits or preferable behaviors. In the mid-twentieth century, many researchers were unable to obtain consistent results on traits and behaviors as predictors for leadership success, and this led to a focus on situational influences. The relationship between leadership style and effectiveness suggested that under condition a, style x would be appropriate, whereas style y would be more suitable for condition b, and style z would be more suitable for condition c. But what were the conditions a,b,c and so forth? It was one thing to say that leadership effectiveness was dependent on the situation and another to be able to isolate those situational conditions. Several approaches to isolating key situ­ ational variables have proven more successful than others and, as a result, have gained wider recognition. We shall consider three of these: the Fiedler model, Hersey and Blanchard’s situational theory, and the path-goal theory. Assess contingency theories of leadership by their level of support. Fiedler contingency model The theory that effective groups depend on a proper match between a leader’s style of interacting with subordinates and the degree to which the situation gives control and influence to the leader. M10_ROBB9658_15_SE_C10.indd 263 Fiedler Model The first comprehensive contingency model for leadership was developed by Fred Fiedler.10 The Fiedler contingency model proposes that effective group performance depends on the proper match between the leader’s style and the degree to which the situation gives control to the leader. 7/31/12 6:47 PM 264 CHAPTER 10     Leadership Least preferred coworker (LPC) questionnaire An instrument that purports to measure whether a person is task or relationship oriented. Identifying Leadership Style Fiedler believes a key factor in leadership success is the individual’s basic leadership style. So he begins by trying to find out what that basic style is. Fiedler created the least preferred coworker (LPC) questionnaire to measure whether a person is task-or relationship-oriented. The LPC questionnaire contains sets of 16 contrasting adjectives (such as pleasant– unpleasant, efficient–inefficient, open–guarded, supportive–hostile). It asks respondents to think of all the coworkers they have ever had and to describe the one person they least enjoyed working with by rating that person on a scale of 1 to 8 for each of the 16 sets of contrasting adjectives. Fiedler believes that based on the respondents’ answers to this LPC questionnaire, he can determine their basic leadership style. If the least preferred coworker is described in relatively positive terms (a high LPC score), then the respondent is primarily interested in good personal relations with this coworker. That is, if you essentially describe the person you are least able to work with in favorable terms, Fiedler would label you relationship oriented. In contrast, if the least preferred coworker is seen in relatively unfavorable terms (a low LPC score), the respondent is primarily interested in productivity and thus would be labeled task oriented. To understand Fiedler’s model, take the following self-assessment exercise before we move on. What is My LPC Score? In the Self-Assessment Library (available online) take assessment IV.E.5 (What is My LPC Score?). Defining the Situation After an individual’s basic leadership style has been assessed through the LPC questionnaire, it is necessary to match the leader with the situation. Fiedler has identified three dimensions that define the key situational factors that determine leadership effectiveness: Leader–member relations The degree of confidence, trust, and respect subordinates have in their leader. Task structure The degree to which job assignments are procedurized. Position power Influence derived from one’s formal structural position in the organization; includes power to hire, fire, discipline, promote, and give salary increases. M10_ROBB9658_15_SE_C10.indd 264 1. Leader–member relations is the degree of confidence, trust, and respect members have in their leader. 2. Task structure is the degree to which the job assignments are procedurized (that is, structured or unstructured). 3. Position power is the degree of influence a leader has over power variables such as hiring, firing, discipline, promotions, and salary increases. The next step in the Fiedler model is to evaluate the situation in terms of these three contingency variables. Leader–member relations are either good or poor, task structure is either high or low, and position power is either strong or weak. Matching Leaders and Situations How would you apply Fiedler’s findings? You would seek to match leaders and situations. Individuals’ LPC scores would determine the type of situation for which they are best suited. That ‘situation’ would be defined by evaluating the three contingency factors of leader–member relations, task structure, and position power. But remember that Fiedler views an individual’s leadership style as being fixed. Therefore, there are really only two ways in which to improve leader effectiveness. First, you can change the leader to fit the situation; for example, a group’s performance could be improved by replacing that manager with one who is task oriented. The second alternative would be to change the situation to fit the leader. That could be done by restructuring tasks or increasing or decreasing the power that the leader has to control factors such as salary increases, promotions, and disciplinary actions. 7/31/12 6:47 PM Contingency Theories: Fiedler Model and Situational Leadership Theory 265 Evaluation As a whole, reviews of the major studies that have tested the overall validity of the Fiedler model lead to a generally positive conclusion. That is, there is considerable evidence to support only three categories rather than the original eight. But there are problems with the LPC questionnaire and the logic underlying the LPC questionnaire is not well understood. Also, the contingency variables are complex and difficult for practitioners to assess. Cognitive Resource Theory More recently, Fiedler has reconsidered his ori­ ginal theory.11 In this refinement, called cognitive resource theory, he focuses on the role of stress as a form of situational unfavorableness and how a leader’s intelligence and experience influence his or her reaction to stress. The basis of the new theory is that stress is the enemy of rationality. It’s difficult for leaders (or anyone else, for that matter) to think logically and analytically when they’re under stress. Hersey and Blanchard’s Situational Theory When Home Depot hired Robert Nardelli as CEO, the company believed he was ‘the right guy’ to improve the company’s performance. Under his leadership, Home Depot’s profits, sales, and number of stores doubled. But shareholders criticized his leadership because he failed to improve the company’s stock price relative to his huge pay package. After leaving Home Depot, Nardelli was hired as ‘the right guy’ to revitalize Chrysler based on his turnaround expertise. Predicting the effectiveness of Nardelli’s leadership as CEO of Home Depot and Chrysler illustrates the premise of contingency theories that leadership effectiveness is dependent on situational influences. Cognitive resource theory A theory of leadership that states that stress unfavorably affects a situation and that intelligence and experience can reduce the influence of stress on the leader. Situational leadership theory (SLT) A contingency theory that focuses on followers’ readiness. Paul Hersey and Ken Blanchard have developed a leadership model that has gained a strong following among management development specialists.12 This model—called situational leadership theory (SLT)—has been incorporated into leadership training programs at more than 400 of the Fortune 500 com­ panies; and more than 1 million managers per year from a wide variety of organizations are being taught its basic elements.13 Situational leadership is a contingency theory that focuses on the followers. Successful leadership is achieved by selecting the right leadership style, which Hersey and Blanchard argue is contingent on the level of the followers’ readiness. Before we proceed, we should clarify two points: Why focus on the followers? And what do they mean by the term readiness? The emphasis on the followers in leadership effectiveness reflects the reality that it is the followers who accept or reject the leader. Regardless of what the leader does, effectiveness depends on the actions of the followers. The term readiness, as defined by Hersey and Blanchard, refers to the extent to which people have the ability and willingness to accomplish a specific task. SLT says that if followers are unable and unwilling to do a task, the leader needs to give clear and specific directions; if followers are unable and willing, the leader needs to display high task orientation to compensate for the followers’ lack of ability and high relationship orientation to get the followers to “buy into” the leader’s desires; if followers are able and unwilling, the leader needs to use a supportive and participative style; and if the employees are both able and willing, the leader doesn’t need to do much. Research efforts to support this theory have generally been disappointing, so despite its intuitive appeal, approval of this theory must be cautioned against. Path-Goal Theory Path-goal theory Developed by Robert House, path-goal theory extracts elements from the Ohio State leadership research on initiating structure and consideration and the expectancy theory of motivation.14 A theory that states that it is the leader’s job to assist followers in attaining their goals and to provide the necessary direction and/or support to ensure that their goals are compatible with the overall objectives of the group or organization. The Theory The essence of path-goal theory is that it is the leader’s job to provide followers with the information, support, or other resources necessary for them to achieve their goals. The term path-goal is derived from the belief that effective leaders clarify the path to help their followers get from where they are to the achievement of their work goals and to make the journey along the path easier by reducing roadblocks. M10_ROBB9658_15_SE_C10.indd 265 7/31/12 6:47 PM 266 CHAPTER 10     Leadership Leader Behaviors House identified four leadership behaviors. The directive leader lets followers know what is expected of them, schedules work to be done, and gives specific guidance as to how to accomplish tasks. The supportive leader is friendly and shows concern for the needs of followers. The participative leader consults with followers and uses their suggestions before making a decision. The achievement-oriented leader sets challenging goals and expects followers to perform at their highest level. In contrast to Fiedler, House assumes leaders are flexible and that the same leader can display any or all of these behaviors, depending on the situation. What Do You Think? Can leaders show different behaviors or are they identified by one specific behavior? Path-Goal Variables and Predictions As Figure 10-2 illustrates, path-goal theory proposes two classes of contingency variables that direct the leadership behavior–outcome relationship: those in the environment that are outside the control of the employee (task structure, the formal authority system, and the work group) and those that are part of the personal characteristics of the employee (locus of control, experience, and perceived ability). For example, the following are illustrations of predictions based on path-goal theory: l l l l Directive leadership leads to greater satisfaction when tasks are ambiguous or stressful than when they are highly structured and well laid out. Supportive leadership results in high employee performance and satisfaction when employees are performing structured tasks. Directive leadership is likely to be perceived as redundant among employees with high perceived ability or considerable experience. Employees with an internal locus of control will be more satisfied with a participative style. Figure 10-2 M10_ROBB9658_15_SE_C10.indd 266 Path-Goal Theory 7/31/12 6:47 PM Leader–Member Exchange (LMX) Theory l 267 Achievement-oriented leadership will increase employees’ expectancies that effort will lead to high performance when tasks are ambiguously structured. Summary of Contingency Theories It is fair to say that none of the contingency theories has been as successful as their developers had hoped. In particular, results for situational leadership theory and path-goal theory have been disappointing. One limitation of many of the theories we’ve covered so far is that they ignore the followers. Yet, as one leadership scholar noted, “leaders do not exist in a vacuum;” leadership is a symbolic relationship between leaders and followers.15 But the leadership theories we’ve covered to this point have largely assumed that leaders treat all their followers in the same manner. That is, they assume that leaders use a fairly homogeneous style with all the people in their work unit. Next we look at a theory that considers differences in the relationships leaders form with different followers. Leader–Member Exchange (LMX) Theory Leader–member exchange (LMX) theory A theory that supports leaders’ creation of in-groups and outgroups; subordinates with in-group status will have higher performance ratings, less turnover, and greater job satisfaction. Think of a leader you know. Did this leader tend to have favorites who made up his or her ‘in-group’? If you answered ‘yes,’ you’re acknowledging the foundation of leader–member exchange theory.16 The leader–member exchange (LMX) theory argues that, because of time pressures, leaders establish a special relationship with a small group of their followers. These individuals make up the in-group—they are trusted, have the leader’s attention, and are more likely to receive special privileges. Other followers fall into the out-group. They get less of the leader’s time, get fewer of the preferred rewards that the leader controls, and have leader–follower relations based on formal authority interactions. This is a familiar concept in the Arab world, where many leaders develop their ‘own circle’ of followers and usually only have ears for them. Just precisely how the leader chooses who falls into each category is unclear, but there is evidence that leaders tend to choose in-group members because they have demographic, attitude, and personality characteristics that are similar to the leader’s or a higher level of competence than out-group members17 (see Figure 10-3). Figure 10-3 M10_ROBB9658_15_SE_C10.indd 267 Leader–Member Exchange Theory 7/31/12 6:47 PM 268 CHAPTER 10     Leadership Decision Theory: Vroom and Yetton’s Leader-Participation Model 5 The final theory we’ll cover argues that the way leaders make decisions is as important as what they decide. Victor Vroom and Phillip Yetton developed a leader-participation model that relates leadership behavior and participation in decision making.18 Recognizing that task structures have varying demands for routine and nonroutine activities, these researchers argued that leader behavior must adjust to reflect the task structure. Vroom and Yetton’s model provides a sequential set of rules that should be followed in determining the form and amount of participation in decision making, as determined by different types of situations. The model is a decision tree incorporating seven contingencies (whose relevance can be identified by making ‘yes’ or ‘no’ choices) and five alternative leadership styles. The 12 contingency variables are listed in Box 10-1. Understand the significance of leader– follower participation. Leader-participation model A leadership theory that provides a set of rules to determine the form and amount of participative decision making in different situations. Inspirational Approaches to Leadership Framing A way of using language to manage meaning. Traditional approaches to leadership—those we considered earlier in this chapter— ignore the importance of the leader as a communicator. Framing is a way of communicating to shape meaning. It’s a way for leaders to influence how others see and understand events. Framing is especially important to an aspect of leadership ignored in the traditional theories: the ability of the leader to inspire others to act beyond their immediate self-interests. In this section, we present two contemporary leadership theories with a common theme. They view leaders as individuals who inspire followers through their words, ideas, and behaviors. These theories are charismatic leadership and transformational leadership. Box 10-1 Contingency Variables in the Revised Leader-Participation Model 1. Importance of the decision 2. Importance of obtaining follower commitment to the decision 3. Whether the leader has sufficient information to make a good decision 4. How well structured the problem is 5. Whether an autocratic decision would receive follower commitment 6. Whether followers ‘buy into’ the organization’s goals 7. Whether there is likely to be conflict among followers over solution alternatives 8. Whether followers have the necessary information to make a good decision 9. Time constraints on the leader that may limit follower involvement 10. Whether costs to bring geographically dispersed members together is justified 11. Importance to the leader of minimizing the time it takes to make the decision 12. Importance of using participation as a tool for developing follower decision skills M10_ROBB9658_15_SE_C10.indd 268 7/31/12 6:47 PM Inspirational Approaches to Leadership 269 Amr Moussa is a charismatic leader. A native of Egypt, he is a former foreign minister and, until recently, was chief of the Arab League. Mussa’s visionary insights resulted in his position as head of the Arab League for two terms. His persistence in following his vision of peace in the Arab world has won him the respect of prominent international figures. Although 75, he has been suggested for a possible major role in a future Egyptian government. 6 Charismatic Leadership Define charismatic leadership and show how it influences followers. John F. Kennedy, Amr Mussa, and Martin Luther King Jr. are often identified as being charismatic leaders. So what do they have in common? What Is Charismatic Leadership? Max Weber, a sociologist, was the first scholar to discuss charismatic leadership. More than a century ago, he defined charisma (from the Greek for ‘gift’) as “a certain quality of an individual personality, by virtue of which he or she is set apart from ordinary people and treated as endowed with supernatural, superhuman, or at least specifically exceptional powers or qualities.” Take the following self-assessment to see how you score on charismatic leadership. How Charismatic Am I? In the Self-Assessment Library (available online), take assessment II.B.2 (How Charismatic Am I?). Charismatic leadership theory A leadership theory that states that followers make attributions of heroic or extraordinary leadership abilities when they observe certain behaviors. M10_ROBB9658_15_SE_C10.indd 269 The first researcher to consider charismatic leadership in terms of OB was Robert House. According to House’s charismatic leadership theory, followers make attributions of heroic or extraordinary leadership abilities when they observe certain behaviors.19 There have been a number of studies that have attempted to identify the characteristics of the charismatic leader. One of the best reviews of the literature has documented four—vision, willingness to take personal risks to achieve that vision, sensitivity to follower needs, and behaviors that are out of the ordinary.20 These characteristics are described in Box 10-2. 7/31/12 6:47 PM 270 CHAPTER 10     Leadership Box 10-2 Key Characteristics of Charismatic Leaders 1. Vision and articulation. Has a vision—expressed as an idealized goal—that proposes a future better than the status quo; and is able to clarify the importance of the vision in terms that are understandable to others. 2. Personal risk. Willing to take on high personal risk, incur high costs, and engage in self-sacrifice to achieve the vision. 3. Sensitivity to follower needs. Perceptive of others’ abilities and responsive to their needs and feelings. 4. Unconventional behavior. Engages in behaviors that are perceived as novel and counter to norms. Source: Based on J. A. Conger and R. N. Kanungo, Charismatic Leadership in Organizations (Thousand Oaks, CA: Sage, 1998), p. 94. Are Charismatic Leaders Born or Made? Are charismatic leaders born with their qualities? Or can people actually learn how to be charismatic leaders? The answer to both questions is yes. Although a small minority thinks that charisma is inherited and therefore cannot be learned, most experts believe that individuals also can be trained to exhibit charismatic behaviors and can thus enjoy the benefits that accompany being labeled ‘a charismatic leader.’21 One set of authors proposes that a person can learn to become charismatic by following a three-step process.22 First, an individual needs to develop an aura of charisma by maintaining an optimistic view; using passion as a catalyst for generating enthusiasm; and communicating with the whole body, not just with words. Second, an individual draws others in by creating a bond that inspires others to follow. Third, the individual brings out the potential in followers by tapping into their emotions. Vision A long-term strategy for attaining a goal or goals. Vision statement A formal articulation of an organization’s vision or mission. How Charismatic Leaders Influence Followers How do charismatic leaders actually influence followers? It begins by the leader articulating an appealing vision. A vision is a long-term strategy for how to attain a goal or goals. The vision provides a sense of continuity for followers by linking the present with a better future for the organization, and this is what the former CEO of Apple, Steve Jobs, showed. A vision is incomplete unless it has an accompanying vision statement. A vision statement is a formal articulation of an organization’s vision or mission. Once a vision and vision statement are established, the leader then communicates high performance expectations and expresses confidence that followers can attain them. This enhances follower self-esteem and self-confidence. Does Effective Charismatic Leadership Depend on the Situation? There is an increasing body of research that shows impressive correlations between charismatic leadership and high performance and satisfaction among followers.23 People working for charismatic leaders are motivated to exert extra work effort and, because they like and respect their leader, express greater satisfaction, as Sony’s CEO demonstrates. It also appears that organizations with charismatic CEOs are more profitable. And charismatic college professors enjoy higher course evaluations.24 However, there is a growing body of evidence indicating that charisma may not always be generalizable; that is, its effectiveness may depend on the situation. That is, charismatic leadership may affect some followers more than others. Research suggests, for example, that people are especially receptive to charismatic leadership when they sense a crisis, when they are under stress, or when they M10_ROBB9658_15_SE_C10.indd 270 7/31/12 6:47 PM Inspirational Approaches to Leadership 271 Sony Corporation, which recently celebrated 40 years of presence in the Middle East, chose a charismatic leader to inspire the company to return to its innovative roots. As Sony’s first CEO and chairman from outside Japan, Howard Stringer, is reorganizing the company to lead the change in making the Sony brand more relevant to digital age consumers. Stringer’s strong sense of humor, optimism, boundless energy, and confidence are motivating employees worldwide, from engineers to executives. One top manager says, “Howard’s personality and his character and the way he communicates have been good for the company.” In this photo, the fun-loving Stringer jokes with Sony top executives about the color of their ties during a press conference announcing his job as CEO. fear for their lives. If an individual lacks self-esteem and questions his self-worth, he is more likely to absorb a leader’s direction rather than establish his own way of leading or thinking. Level-5 leaders Leaders who are fiercely ambitious and driven but whose ambition is directed toward their company rather than themselves. Transactional leaders Leaders who guide or motivate their followers in the direction of established goals by clarifying role and task requirements. 7 The Dark Side of Charismatic Leadership Many companies want a charismatic CEO. And to attract these people, boards of directors give them autonomy and resources. One study showed that charismatic CEOs were able to use their charisma to secure higher salaries even when their performance was average.25 Unfortunately, charismatic leaders who are too ambitious don’t necessarily act in the best interests of their organizations.26 Many of these leaders used their power to remake their companies in their own image. These leaders often completely blurred the boundary separating their personal interests from their organization’s interests. There are, on the other hand, strong leaders inside firms who could direct the company to greater heights. These individuals have been called level-5 leaders because they have four basic leadership qualities—individual capability, team skills, managerial competence, and the ability to stimulate others to high performance—plus a fifth dimension: a blend of personal humility and professional will. Level-5 leaders channel their ego nee…

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