Learning Objectives: Define organizational behavior (OB); Show the value to OB of systematic study; Demonstrate the importance of interpersonal skills in the workplace; Describe the manager's functions, roles, and skills; Identify the challenges and opportunities managers have in applying IB concepts; Demonstrate why few absolutes apply to OB

Learning Outcomes: Define organizational behavior and identify the variables associated with its study; Describe the factors that influence the formation of individual attitudes and values; Apply the study of perception and attribution to the workplace; Define diversity and describe the effects of diversity in the workforce; Describe the nature of conflict and the negotiation process; Describe best practices for creating and sustaining organizational cultures; Describe best practices for creating and sustaining organizational cultures; Describe the components of human resource practices

The Scenario:

The great global recession has claimed many victims. In many countries, unemployment is at near-historic highs, and even those who have managed to keep their jobs have often been asked to accept reduced work hours or pay cuts. Another consequence of the current business and economic environment is an increase in the number of individuals employed on a temporary or contingent basis.

The statistics on U.S. temporary workers are grim. Many, like single mother Tammy Smith, have no health insurance, no retirement benefits, no vacation, no severance, and no access to unemployment insurance. Increases in layoffs mean that many jobs formerly considered safe have become "temporary" in the sense that they could disappear at any time with little warning. Forecasts suggest that the next five to ten years will be similar, with small pay increases, worse working conditions, and low levels of job security. As Peter Cappelli of the University of Pennsylvania's Wharton School notes, "Employers are trying to get rid of all fixed costs. First they did it with employment benefits. Now they're doing it with the jobs themselves. Everything is variable."

We might suppose these corporate actions are largely taking place in an era of diminishing profitability. However, data from the financial sector is not consistent with this explanation. Among Fortune 500 companies, 2009 saw the second-largest jump in corporate earnings in the list's 56-year history. Moreover, many of these gains do not appear to be the result of increases in revenue. Rather, they reflect dramatic decreases in labor costs. One equity market researcher noted, "The largest part of the gain came from lower payrolls rather than the sluggish rise in sales..." Wages also rose only slightly during this period of rapidly increasing corporate profitability.

Some observers suggest the very nature of corporate profit monitoring is to blame for the discrepancy between corporate profitability and outcomes for workers. Some have noted that teachers whose evaluations are based on standardized test scores tend to "teach to the test," to the detriment of other areas of learning. In the same way, when a company is judged primarily by the single metric of a stock price, executives naturally try their best to increase this number, possibly to the detriment of other concerns like employee well-being or corporate culture. On the other hand, others defend corporate actions that increase the degree to which they can treat labor flexibly, noting that in an increasingly competitive global marketplace, it might be necessary to sacrifice some jobs to save the organization as a whole.

The issues of how executives make decisions about workforce allocation, how job security and corporate loyalty influence employee behavior, and how emotional reactions come to surround these issues are all core components of organizational behavior research.

Questions:

1. To what extent can individual business decisions (as opposed to economic forces) explain deterioration in working conditions for many workers?

2. Do business organizations have a responsibility to ensure that employees have secure jobs with good working conditions, or are their primary responsibility to shareholders?

3. What alternative measures of organizational performance, besides share prices, do you think might change the focus of business leaders?

4. If you were to study this issue from an organizational behavior perspective describes the study you would implement? What input and output variables would you look at and why?