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F O U R T H A U S T R A L A S I A N E D I T I O N
Jack WOOD
Rachid ZEFFANE
Michele FROMHOLTZ
Retha WIESNER
Rachel MORRISON
Aharon FACTOR
Tui MCKEOWN
CORE CONCEPTS AND APPLICATIONS
BEHAVIOUR
ORGANISATIONAL

vi CONTENTS
PART ONE INTRODUCTION 1
CHAPTER 1 WHAT IS ORGANISATIONAL BEHAVIOUR? 3
Learning objectives 3
Introduction 5
What is organisational behaviour? 5
Why do organisations exist? 7
Organisations as open systems 8
Managers in organisations 10
What is an effective manager? 10
Managing task performance 10
Human resource maintenance 11
The management process 13
Contemporary themes in organisational
behaviour 14
Globalisation 14
The changing nature of work 16
The changing nature of the workforce 18
The changing nature of employer–employee
relations 22
Ethics and values 27
Why study organisational behaviour? 29
Summary 30
Chapter 1 study guide 32
Key terms 32
Review questions 32
Application questions 32
Research questions 33
Running project 33
Individual activity 33
Group activity 34
Case study: Resene Paints Ltd 35
End notes 36
PART TWO MANAGING INDIVIDUAL BEHAVIOUR AND PERFORMANCE 39
CHAPTER 2 INDIVIDUAL ATTRIBUTES AND THEIR EFFECTS ON JOB PERFORMANCE 41
Introduction 43
Individual performance factors 43
Individual attributes 43
Work effort 45
Organisational support 45
Demographic differences among individuals 46
Competency differences among individuals 47
CONTENTS
Tutorial activities at a glance xvii
Cases and real-world examples at a glance xviii
How to use this book xxii
About the authors xxiv
Acknowledgements xxvi
What would you do? 12
The effective manager 1.1 14
Moving from traditional to re-engineered values 14
Ten attributes of the global manager 15
Counterpoint 15
International spotlight 19
Ethical perspective 23

Cognitive abilities 47
Physical abilities 47
Emotional competence 48
Personality differences among individuals 50
Personality determinants 50
Personality traits 51
Individual differences and workplace diversity 54
Values 56
Sources and types of values 56
Patterns and trends in values 56
Attitudes 59
Components of attitudes 59
Attitudes and cognitive consistency 60
Job satisfaction as an attitude 60
Job satisfaction and workplace behaviour 62
Job satisfaction, absenteeism and turnover 62
The link between job satisfaction and overall
job performance 64
Perception and the perceptual process 67
Factors influencing the perceptual process 67
Stereotyping 68
Summary 70
CHAPTER 2 study guide 72
Key terms 72
Review questions 72
Running project 73
Group activity 74
Case study: Perceptions, attitudes and job dissatisfaction:
a tricky issue 75
End notes 76
CHAPTER 3 MOTIVATION AND EMPOWERMENT 79
Introduction 80
Motivating and empowering the workforce 81
Contemporary issues affecting motivation
and empowerment 81
The work motivation challenge 85
Content and process motivation theories 87
Content theories 88
Maslow’s hierarchy of needs theory 88
Alderfer’s ERG theory 91
McClelland’s acquired needs theory 92
Herzberg’s two‐factor theory 93
Process theories 98
Equity theory 98
Expectancy theory 101
Integrating content and process
motivation theories 105
Other perspectives on motivation 106
Empowerment 108
Summary 111
Key terms 113
Review questions 113
Working with workplace diversity
Facets of job satisfaction (from the Job Descriptive Index)
Counterpoint 63
CONTENTS vii
CONTENTS

viii CONTENTS
CONTENTS
Running project 114
Group activity 116
Case study: Employee empowerment at the Bank of
New Zealand 117
End notes 118
CHAPTER 4 Learning, reinforcement and self-management 123
Introduction 124
Learning as a modification of work behaviour 125
Classical conditioning 126
Operant conditioning 127
Cognitive learning 128
Social learning 128
Reinforcement as a strategy to modify work
behaviour 131
Positive reinforcement 132
Negative reinforcement (avoidance) 136
Punishment 136
Extinction 138
Organisational behaviour modification
strategies — a summary 139
Reinforcement perspectives: using rewards
carefully 139
Reinforcement perspectives: do incentives
actually work? 140
Social learning theory and behavioural
self‐management 141
Managing pay as an extrinsic reward 143
Multiple meanings of pay 144
Merit pay 144
Creative pay practices 146
The learning organisation 148
The teaching organisation 151
Summary 152
Key terms 154
Running project 155
Group activity 156
Case study: Experiential learning in organisations …
just do it! 157
End notes 158
Steps for managing the equity process
Tips for influencing the perceived valence of
work outcomes
Sustainability 107
Sustainability 133
Counterpoint 134
Guidelines for allocating extrinsic rewards to ensure a

positive reinforcement effect
Guidelines for using punishment to change behaviour
Creating a learning organisation
Counterpoint 89

ix
CONTENTS
CONTENTS
CHAPTER 5 JOB DESIGN, GOAL SETTING AND FLEXIBLE WORK ARRANGEMENTS 163
Introduction 164
Intrinsic motivation 165
Job design 166
Job simplification 167
Job enlargement 168
Job rotation 168
Job enrichment 170
The job characteristics model 171
Individual differences: moderators of the job
characteristics model 173
Testing and the motivating potential score 174
The research 174
Socio‐technical job design 178
Social information and job design 178
Multiskilling 178
Goal‐setting theory 179
Goal setting: follow‐up research 180
Goal setting and MBO 180
Key performance indicators 182
Flexible work arrangements 183
Major drivers of changing work arrangements 183
Types of flexible work arrangements 190
Summary 196
Key terms 198
Running project 199
Group activity 200
Case study: Brolly Sheets and ‘mumpreneur’
Diane Hurford 200
End notes 201
PART THREE MANAGING GROUP DYNAMICS AND TEAM
PERFORMANCE 207
CHAPTER 6 GROUPS AND GROUP DYNAMICS 209
Introduction 211
What is a group? 211
Types of groups in organisations 211
Purposes of groups in organisations 214
Managing groups for effectiveness 216
Task performance and group maintenance 217
Group effectiveness 218
Groups as open systems 219
Inputs into the group process 220
Organisational setting 220
Nature of the group task 222
General membership characteristics 223
Group size 226
Group processes and group dynamics 227
Stages of group development 228
Required and emergent behaviours 230
Group norms and roles 230
Emotions in groups 232
Group communication and decision making 233
Counterpoint 165
Guidelines for implementing a program of job enrichment
Key issues for mutual goal setting in an MBO program
Counterpoint 186

x CONTENTS
CONTENTS
Outputs of the group process — task performance
and group maintenance 234
Intergroup dynamics 236
Work flow interdependency and intergroup
relations 236
Other factors affecting intergroup relations 237
Dynamics of intergroup competition 238
Summary 239
Key terms 241
Running project 242
Group activity 243
Case study: Workgroup behaviour in a New Zealand
factory 243
End notes 244
CHAPTER 7 TEAMWORK AND TEAM BUILDING 247
Introduction 248
What are teams? 249
Groups versus teams 250
Teams and their effectiveness 251
Effective teams 251
Foundations of the team‐building process 253
Team‐building goals 253
Effective team leadership 254
Effective team facilitators 256
Teamwork activities and training 257
Timing and location of teamwork activities 260
Team performance and cohesiveness 261
Team norms 262
Team roles and role dynamics 262
Team cohesiveness 263
Types of workplace teams 266
Employee involvement teams 267
Problem‐solving teams 267
Self‐managing teams (SMTs) 268
Virtual teams 270
Future challenges for work teams 272
Empowerment through new technology 273
Trust 273
Accountability 273
Diversity 273
Team leadership 274
Summary 275
Key terms 277
Running project 278
Group activity 279
Case study: Understanding the self 279
End notes 281
Ten characteristics of an effective group
Sustainability 222
Counterpoint 227

xi
CONTENTS
CONTENTS
Seven steps for leaders to encourage positive team norms
Counterpoint 265
How to build a high-performing team
Ten rules for team leaders to create effective teams
Part Four
MANAGING ORGANISATIONAL PROCESSES
AND
PERFORMANCE 283
CHAPTER 8 ORGANISATIONAL STRUCTURE AND DESIGN 285
Introduction 287
Organisational structure and design 287
Factors influencing organisational design 289
Scale 289
Technology 289
Environment 290
Strategy 291
Organisational goals, control and
coordination 292
Organisational goals 292
Control 294
Coordination 297
Vertical specialisation 301
Unity of command and span of control 302
Horizontal specialisation 302
Departmentalisation by function 304
Departmentalisation by division, geography and
customer 305
Departmentalisation by matrix 307
Mixed forms of departmentalisation 310
Emerging forms of organisational design and
workforce implications 311
The simple design 312
The bureaucracy 312
Divisionalised organisations 315
The conglomerate 315
The core–ring organisation 317
The adhocracy 318
Other structural arrangements 319
Summary 320
Key terms 323
Running project 324
Group activity 325
Case study: Why do bosses need to go ‘undercover’? 326
End notes 327
Signs of too much control
Selecting personal coordination styles
Counterpoint 299
Sustainability 309
The natural dysfunctional tendencies of a bureaucracy

xii CONTENTS
CONTENTS
CHAPTER 9 ORGANISATIONAL CULTURE 331
Introduction 332
The concept of organisational culture 333
Understanding the connections between

organisational and national cultures 333
Levels of cultural analysis 334
Subcultures and countercultures 335
Imported subcultures and cultural diversity 337
Observable aspects of organisational culture 339
Stories, rites, rituals and symbols 339
Cultural rules and roles 341
Values and organisational culture 342
Linking actions and values 342
Common assumptions and organisational culture 343
Common assumptions and management
philosophy 343
What do organisational culture researchers
investigate? 344
Different perspectives on organisational culture 345
The integration perspective 345
The differentiation perspective 346
Ambiguity/fragmentation perspective 346
The functions of organisational culture for its
members 347
Managing organisational culture: building, reinforcing
and changing culture 349
Ethics and organisational culture 351
Climate versus culture 352
Summary 353
Key terms 355
Running project 356
Group activity 357
Case study: The need for cultural change at ADFA and
the ADF 358
End notes 359
CHAPTER 10 POWER, POLITICS AND INFLUENCE IN ORGANISATIONS 363
Introduction 364
Power and influence 365
Position power 367
Personal power 370
Power, authority and obedience 372
The Milgram experiments 372
Obedience and the acceptance of authority 373
Obedience and the zone of indifference 375
Managing with power and influence 376
Acquiring managerial power 377
Turning power into influence 378
Exercising upward influence 380
Empowerment 380
Power keys to empowerment 380
Empowering others 381
The limits of empowering others 382
Organisational politics 382
The two traditions of organisational politics 383
Organisational politics in action 385
Office politics and the informal network 385
Political action and the manager 385
Political action and subunit power 386
Political action in the chief executive suite 387
The politics of empire building 389
Counterpoint 347
Using organisational culture to help the organisation compete

xiii
CONTENTS
CONTENTS
The consequences of power and politics 390
The double‐edged sword of organisational
politics 390
The ethics of power and politics 391
Trust and managerial influence 393
Summary 393
Key terms 395
Running project 396
Group activity 397
Case study: When leadership brawls become ugly 398
End notes 399
CHAPTER 11 LEADERSHIP 401
Introduction 402
Leadership and management 403
Traditional leadership approaches: trait and
behavioural theories 404
Trait theory 404
Behavioural theories 404
Situational contingency theories of leadership 407
Fiedler’s leadership contingency theory 407
House’s path–goal theory of leadership 409
Hersey and Blanchard’s Situational Leadership®
model 411
Substitutes for leadership 412
Inspirational leadership perspectives 413
Charismatic approaches 414
Transactional and transformational leadership
approaches 415
Emerging leadership perspectives 419
Integrative leadership 419
Crisis leadership 426
Moral leadership 428
Sustainability leadership 431
Questions and answers concerning the emerging
leadership perspectives 433
Gender, age and cultural diversity — current issues in
leadership 436
Gender and leadership 436
Age and leadership 437
Leadership and culture 439
Summary 440
Key terms 442
Running project 443
Group activity 445
Case study: Sustainability leadership is alive and well at
the Good Guys 446
End notes 447
Dealing with insubordinate employees
Guidelines for implementing empowerment
Counterpoint 384

xiv CONTENTS
CONTENTS
CHAPTER 12 DECISION MAKING 453
Introduction 454
Decision making in organisations 454
Types of decisions made by managers 455
Decision environments of managers 455
Steps in the decision‐making process 457
Approaches to decision making 457
Classical and behavioural decision models 458
Garbage can decision model 459
The intuitive decision model 460
The role of intuition 461
The use of judgement heuristics 462
Creativity 463
Making a choice and implementing a decision 463
Selecting problems carefully 464
Strategies for involvement — who decides? 464
Managing participation in decision making 466
How groups make decisions 467
The problem of escalating commitment 473
Current issues in organisational decision
making 474
Culture and decision making 474
Technology and decision making 475
Ethical decision making 475
Summary 480
Key terms 482
Running project 483
Group activity 484
Case study: Decision making in the Victorian
bushfires 485
End notes 486
Counterpoint 406
The four ‘I’s of transformational leadership
Sustainability 432
20 characteristics of a strong leader
Counterpoint 461
Improving organisational problem-solving skills
Guidelines for achieving group consensus
Spotting the symptoms of ‘groupthink’

xv
CONTENTS
CONTENTS
CHAPTER 13 COMMUNICATION, CONFLICT AND NEGOTIATION IN ORGANISATIONS 491
Introduction 492
Communication in organisations 493
Interpersonal communication 494
Effective and efficient communication 495
Communication channels 496
Barriers to interpersonal communication 498
Social media and the workplace 499
Conflict 500
What is conflict? 500
Substantive and emotional conflicts 501
Levels of conflict 502
Conflict and culture 504
Constructive and destructive conflicts 504
Conflict situations faced by managers 506
Conflict‐management approaches 508
Conflict‐resolution styles 508
Negotiation 512
Four types of negotiation situations 512
Negotiation goals and outcomes 513
Different approaches to negotiation 514
Managerial issues in negotiation 515
Gaining integrative agreements 516
Classic two‐party negotiation 516
Summary 519
CHAPTER 13 Study guide 521
Key terms 521
Running project 522
Group activity 523
Case study: The perils of social media 524
End notes 524
CHAPTER 14 ORGANISATIONAL CHANGE AND INNOVATION 527
Introduction 528
What is organisational change? 529
Planned and unplanned change 529
Leadership of change 530
Forces of change 532
Cultural change 532
Technological change 533
Organisational targets for change 533
Phases of planned change 535
Change levers and change cycles 536
Planned change strategies 539
Top‐down approach to change 539
Force‐coercion and planned change 540
Rational persuasion and planned change 540
Shared power and planned change 541
Resistance to change 542
Why people resist change 542
How to deal with resistance to change 543
Sustainability 497
The habits of good communicators
Communication that can lead to conflict
How to prevent destructive conflict
What can be done to better manage workplace conflict?
Counterpoint 518

xvi CONTENTS
CONTENTS
Change and stress 545
What is stress? 545
Sources of stress 545
Stress and our health 545
Preventing or coping with stress 547
Innovation in organisations 548
The innovation process 549
Summary 552
Key terms 554
Running project 555
Group activity 556
Case study: LEGO — when innovation is not the Holy
Grail 557
End notes 559
PART FIVE CASE STUDIES 561
Case study 1: The Princess Polly story 562
Case study 2: Management style and
employee–management relations 564
Case study 3: Manukau Water: it’s not only
about pipes 567
Case study 4: Woolworths: what it does take 570
Glossary 573
Index 586
Pathways to effective cultural change
Counterpoint 537
Guidelines for effective change
Promoting an innovation culture

xvii
TUTORIAL ACTIVITIES AT A GLANCE
CHAPTER Individual activity Group activity
1 What is organisational behaviour? Global awareness Management foundations
2 Individual attributes and their effects on job
performance
Your personality type Building a more positive self‐concept
3 Motivation and empowerment Are you motivated to work hard at
your studies?
What do you want from a job — motivators
or hygienes?
4 Learning, reinforcement and self‐
management
Learning awareness questionnaire Getting creative with remuneration
5 Job design, goal setting and flexible work
arrangements
The case of the casual workforce Motivation by job enrichment
6 Groups and group dynamics Analysing a group Analysing your groups
7 Teamwork and team building Identifying norms that influence teams Brainstorming
8 Organisational structure and design Vertical and horizontal specialisation:
organising XYZ Paper Company
Assessing organisational structure and design
9 Organisational culture Which culture fits you? Your university culture
10 Power, politics and influence in
organisations
Influence tactics Machiavellianism
11 Leadership Survey of leadership Leadership in action
12 Decision making Decision‐making biases The fishing trip
13 Communication, conflict and negotiation in
organisations
Conflict management strategies Conflict resolution
14 Organisational change and innovation Innovative attitude scale Force field analysis

xviii CASES AND REAL-WORLD EXAMPLES AT A GLANCE
CASES AND REAL-WORLD EXAMPLES AT A GLANCE
CHAPTER Opening vignette OB in action
1 What is organisational
behaviour?
Complexity and today's
organisations
Fast food specialisation, BreadTalk (Singapore), Baby boomers at work
(Australia/New Zealand), Transforming training for apprentices in
Australia, Outsourcing to India (Australia/India), Workplaces
of the future
2 Individual attributes and their
effects on job performance
Staff engagement
and retaining workers
(Australia/New Zealand)
Chorus of inspired staff (New Zealand), Women in management
(Australia/New Zealand), What are Australians dreaming of?, Challenges
faced by mature‐aged employees
3 Motivation and empowerment The puzzle of motivation Workforce ageing — an issue for employers (New Zealand), Frustrated
by ‘red tape’, Workplace motivation and culture (China), Why are people
leaving their jobs? (New Zealand), What will employees find rewarding?,
Empowerment — What nurses want
4 Learning, reinforcement and self‐
management
The unintended
consequences of
rewards — when
incentives backfire
Learning from failure, Pay for performance (incentive pay), Punishment
and shame in organisations, Extinction in action — if you don't hear from
me, you know you're doing fine, Self‐management versus empowerment,
The trouble with learning, Pixar: the ultimate learning organisation,
A knowledge management officer for every organisation?
5 Job design, goal setting and
flexible work arrangements
The third metric Kiwis want flexibility and opportunity for growth (New Zealand), Clear
goals means increased job satisfaction, Flexibility and autonomy beat
all!, Subjective wellbeing — meaningful work and family focus creates
lasting happiness, All, nothing or both? Flexibility allows mothers to
make good career choices
6 Groups and group dynamics Working in groups is not
for everyone — the new
'groupthink'
New Zealand and Australian military task force foils drug smugglers, The
importance of workplace friends, Group problem solving
7 Teamwork and team building Teamwork in the defence
forces — is it a matter of
life or death?
Sushi team bonding (New Zealand), Team IQ (Australia/Asia), Trust drives
empowerment in Chinese hotels (Asia), The Pirates Dilemma,
Brainstorming is brilliant (New Zealand), Virtual team intelligence
8 Organisational structure and
design
Structure, design and
partnerships
The global financial crisis and organisational design, Australian wool
exporter conquers Chinese market (Australia/Asia), The Chinese
perception of quality, Breaking the silos at Sony and the New Zealand
public sector

xix
Ethical
perspective Counterpoint
What would
you do?
International
spotlight Sustainability Case study
Paid parental
leave — whose
responsibility is it?
Globalisation for
good or evil?
IQ testing in
recruitment
The dimensions of
culture
Corporate social
responsibility in
South‐East Asia
Resene Paints Ltd
(New Zealand)
An ethical
predicament
Gen Ys are not all the
same
Sickies — staff
absenteeism
Global managerial
competencies
Perceptions,
attitudes and job
dissatisfaction:
a tricky issue
Bridging the gender
pay gap (Australia/
New Zealand)
Satisfying
generational needs
— reality or myth?
Knowledge of pay
process
Supply and demand
of labour — a global
phenomenon
Sustainability
motivates (New
Zealand)
Employee
empowerment at the
Bank of New Zealand
Paying for
performance
Incentives modify
behaviour … but not
always in the way we
hope!
Australia's maths
crisis. Is poor self‐
efficacy to blame?
What is more
rewarding than
money? The case of
Korea
Piece rates and ‘the
China price’
Experiential learning
in organisations
… just do it! (New
Zealand)
The quest for work–
life balance
Putting a price tag
on friends, Is a bad
job better than no job
at all?
Having to do boring
work … even the
simplest of jobs
can offer fulfilment,
Feeling stressed and
disengaged at work?
From bags to tickets
to customer service
(Singapore)
Brolly Sheets and
‘mumpreneur’ Diane
Hurford (Australia/
New Zealand)
Managing emotions
and moods at work
— how far can
managers go?
Too much group
work?
Improving health
care — the impact of
effective groups
Groups and cultural
difference (China)
Vigilantes of the sea Workgroup behaviour
in a New Zealand
factory
Fair treatment of
team members and
perceptions of justice
When ‘teams’ do not
work!
When the senior
executive team is to
blame
Bain Southeast Asia:
a great place to work
(Asia)
Understanding the
self (New Zealand)
Health check
(Australia)
Social media
and workplace
productivity
Coordination
in temporary
organisations,
The pros and cons
of growth and
acquisition
Fonterra: from local
prominence to global
reach (New Zealand)
Organisational
structures for
sustainability
Why do bosses need
to go ‘undercover’?

xx CASES AND REAL-WORLD EXAMPLES AT A GLANCE
CHAPTER Opening vignette OB in action
9 Organisational culture Organisational culture and
values
Maintaining creativity in times of organisational growth, Corporate
clothing gives a sense of unity, Organisational culture and customer
service at GASP clothing, Ethical dilemmas and the workplace,
Coworking around the world (New Zealand)
10 Power, politics and influence in
organisations
Organisational politics,
power and corruption
Empowering employees, Empowering women, The nasty side of office
politics (New Zealand), Boys’ clubs alive and well (Australia)
11 Leadership Paving the way for
innovation
Leadership across the generations, Leadership at The Physio Co
(Australia), Exerting influence without authority, Preparing for a crisis,
Regional leadership development in the Pacific (Australia/New Zealand),
The cost of absenteeism
12 Decision making How top CEOs make
decisions
BP risks safety and environment in Gulf of Mexico, New Zealander
creates Unified Inbox (New Zealand), Dealing with a flood of decisions
(Australia), Groupthink involved in space shuttle tragedy, Bendigo
and Adelaide Bank consider stakeholder interests in decision making
(Australia)
13 Communication, conflict and
negotiation in organisations
The changing social media
face of organisations
Eliminating noise in communication, The etiquette of email
communication, Skills for dealing with disgruntled employees
14 Organisational change and
innovation
Leading change when
going public
Planting seeds of success, Driving change that is environmentally
friendly, Google: the trick to grow exponentially and still stay innovative
Includes New Zealand content
Includes Asian content

xxi
Ethical
perspective Counterpoint
What would
you do?
International
spotlight Sustainability Case study
Ethical cultural
change at Siemens
The role of culture
in adopting
sustainability in
business
Dress to express Dover Park Hospice:
embracing volunteers
into its culture
(Singapore)
The need for cultural
change at ADFA and
the ADF
Power and bullying Managing up:
exercising personal
power
Working in the
Woomera detention
centre
The challenge of
managing across
cultures (Asia)
When leadership
brawls become ugly
Companies with few
females in governing
positions may be
short-changing their
investors
Reality check: the
perils of leadership
The trust predicament The challenges of
leading cross‐cultural
virtual project teams
Views from a
sustainability leader
Sustainability
leadership is alive
and well at the Good
Guys (Australia)
Discrimination
evident in employers’
recruitment decisions
Asian leaders
value creativity and
intuition more than
New Zealand leaders
(New Zealand/Asia)
Escalation of
commitment by bank
loan officers and
university students
The precautionary
principle
Decision making
in the Victorian
bushfires
Organisational
control and social
media
The virtue and vice of
workplace conflict
Underlying conflict Email and conflict
escalation
Communication and
sustainability
The perils of social
media
Utilising tools to keep
stress in check
Dealing with
resistance through
clear communication
and anchoring (Asia)
Creating an
innovation culture
Stimulating social
innovation through
crowdfunding
LEGO — when
innovation is not the
Holy Grail

xxii HOW TO USE THIS BOOK
HOW TO USE THIS BOOK
Organisational Behaviour: Core Concepts and Applications, 4th Australasian edition, has been
designed with you, the student, in mind. We aim to provide you with a tool that best com-
municates the subject matter and facilitates learning. The following elements have been
developed to assist you.
LEARNING OBJECTIVE Learning objectives listed at the start of
each chapter help you identify the essential elements of that
chapter. For ease of study, these learning objectives are
revisited in the chapter summary.
COUNTERPOINT
OB IN ACTION These boxed features
throughout the text show how people can
make a difference in the way organisations
operate by highlighting progressive or
innovative practices from the real world.
ETHICAL PERSPECTIVE Ethical
perspective features highlight situations
and dilemmas that may affect investor,
consumer and staff attitudes, the long‐
and short‐term economic viability of the
organisation, and management practices.
COUNTERPOINT Counterpoint
features provide an opposing view to
stimulate discussion, analysis and the
development of critical thinking skills.
WHAT WOULD YOU DO? Regularly
throughout the text, you will be
asked to put yourself in the shoes of
a decision maker and to propose a
solution to an organisational issue.
SUSTAINABILITY Sustainability features
explore issues of human and ecological
wellbeing in the context of organisational
and management practices.
INTERNATIONAL SPOTLIGHT
International spotlight features
elaborate on the management
practices of organisations around the
world, particularly focusing on those
operating in the Asia–Pacific region.
THE EFFECTIVE MANAGER Practical tips
and checklists provide advice on how to
achieve high performance in dynamic
and demanding work environments.

xxiii
STUDY GUIDE
Each chapter concludes with an integrated study
guide. Designed for self‐study, it includes:
• a list of key terms
• review, application and research questions
• a running project
• individual and group activities
• a case study.
154 Part 2 • Managing individual behaviour and performance
Key terms
behaviourists, p. 125
classical conditioning, p. 126
cognitive evaluation theory, p. 141
cognitive learning, p. 128
continuous reinforcement, p. 133
extinction, p. 138
extrinsic rewards, p. 131
intermittent reinforcement, p. 133
intrapersonal conflict, p. 143
law of contingent reinforcement,
p. 132
law of effect, p. 131
law of immediate reinforcement,
p. 132
learning, p. 125
merit pay, p. 144
negative reinforcement, p. 136
non-contingent reward, p. 138
operant conditioning, p. 127
organisational behaviour
modification, p. 131
organisational learning, p. 148
piece rate, p. 133
positive reinforcement, p. 132
punishment, p. 136
reverse-incentive effect, p. 141
self-determination theory, p. 141
shaping, p. 132
social learning, p. 128
stimulus, p. 126
successive approximation, p. 132
teaching organisation, p. 151
Review questions
1. Explain the law of effect.
2. What are extrinsic rewards and how are these related
to learning and reinforcement?
3. Distinguish between negative reinforcement and
punishment.
4. Summarise the main features of a learning
organisation.
Application questions
1. Describe the classical conditioning process and
provide examples of its impact on behaviours and
emotions.
2. Mentoring, based on social learning theory, is often
used to teach less experienced managers new skills.
Discuss the operation and efficacy of mentoring
programs in the contemporary workplace.
3. Punishment strategies should be used sparingly by
managers. Explain why.
4. What are some of the ethical issues to consider when
linking pay to performance?
5. Turn back to the International Spotlight. What are
some cultural issues to consider when using incentives
for the purpose of achieving greater performance?
6. Critically analyse the difference between a learning
organisation and organisational learning.
7. McDonalds, Nike, Levis, The Gap and many other
companies have been widely criticised for using
cheap labour in developing countries (refer back to
the Sustainability boxed feature on ‘Piece rates and
“the China price”’).
(a) Do you buy products from these companies? Does
having information about human rights abuses
make you want to avoid their products? Why?
Why not?
(b) Why is it that China is able to continue to pay
parts of its labour force at such a low rate? Think
about demand and supply (of both products and
labour).
(c) Think about the lack of intrinsic reward that jobs
in Chinese factories provide. Few people would
choose to work in one if given a choice. What
other types of incentive schemes might possibly
work in this environment?
CHAPTER 4 study guide
F/HDUQLQJ5HLQIRUFHPHQW$QG6HOI0DQDJHPHQWLQGG 30
END‐OF‐BOOK CASE STUDIES
Additional situational and real‐life cases enable you to apply
what you have learnt to key concepts from multiple chapters.
564 Part 5 • Case studies
MANAGEMENT STYLE AND EMPLOYEE–
MANAGEMENT RELATIONS1
Background
Fiji Ships and Heavy Industries Limited (FSHIL), once
known as Government Shipyard and Public Slipways
(GSPS), was initially a wholly Fijian government‐owned
entity. Fiji, one of the most developed of the Pacific Island
economies, is an island nation located in the heart of
the Pacific Ocean, southwest of Honolulu, midway to the
equator and New Zealand. GSPS was later corporatised as
Shipbuilding (Fiji) Limited (SFL) to pave the way for its
privatisation process. When SFL underwent receivership
in 1999, the Fijian government made a successful $6.25 m
bid to acquire the assets from the receivers. It was in
2002 (effective 1 January 2003) that the Board decided to
change the company name to FSHIL to better reflect the
extensive range of heavy engineering work carried out by
the company. In the same year, an international search was
done for the appointment of a CEO.
November 2002 saw the appointment of a CEO who
came to FSHIL from Papua New Guinea. The new CEO
had thirty years of experience in shipbuilding and ship
repairs and had been a ships engineer in the ten years
prior. His role became effective in 2003. In the period
prior to the appointment of this full‐time CEO, FSHIL had
an acting CEO — one that had to work to gain the accept-
ance of his employees. The way the acting CEO carried
himself and how he not only consulted the union/workers,
but was also receptive to their suggestions and requests
encouraged the employees to accept the acting CEO. With
the introduction of the new CEO, problems began to sur-
face between management and the ‘managed’.
The situation breakdown
The CEO was unhappy with what he witnessed after joining
FSHIL, contending that he had been brought into a polit-
ically sensitive shipyard that was not doing well, had old
machinery and an overly tarnished reputation. He asserted
that the biggest and the most difficult of all challenges was
Fiji’s laidback culture towards commercial operations. He
had positive plans to further upgrade the shipyard, but
was held back by finances and investor confidence. The
members of the FSHIL in‐house union decided that they
would prefer to be a part of the Transport Workers Union
(TWU) and to resign from the in‐house union.
Following is a breakdown of the events in 2003 following
the introduction of the new CEO and the in‐house union’s
decision to change unions.
CASE STUDY 2
August 25 The secretary of the in‐house union writes to the general secretary of TWU to join with them.
September 1 TWU writes to the CEO seeking voluntary recognition. The CEO advises that he will respond after the
Board meeting on 4 September 2003.
4 The first termination under the new CEO is made at FSHIL. The technical services manager (with 30
years’ shipbuilding experience) receives a termination letter (effective immediately) from the CEO, with
payment for only the one‐month’s pay that was stipulated in the manager’s contract and no reason given
for the termination. The technical services manager requests a written explanation for the reason of his
termination from the CEO, but receives no response — he had only served eighteen months of his three‐
year contract.
%0DVH6WXGLHVLQGG $0

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DWEADFUL ACCIDENT IN HIGH LIFE.
THE HONOURABLE SPENCER DAWDLE (WHOSE TOTAL ABSENCE
OF MIND IS SO WELL KNOWN) HAVING MADE A MORNING CALL
IN BELGRAVIA, WALKS OFF WITH A HAT AND STICK WHICH DO
NOT BELONG TO HIM!

THE NEW REGULATION.
Lieutenant Blazer (of the Plungers). GOOD GWACIOUS! HERE'S A
HORWIBLE GO! INFANTWY'S GOING TO GWOW A MOUSTACHE!
Cornet Fluffey. YAW DON'T MEAN THAT! WELL! THERE'S ONLY
ONE ALTERNATIVE FOR US. WE MUST SHAVE!

A PICTURE OF ALIMENTIVENESS.
A NICE LITTLE BIT OF FISH.

WHERE THERE'S A WILL, THERE'S A WAY.
Foxhunting Doctor. NOT BE IN TIME! OH, NONSENSE! SEND MY
HORSE ON,—SEE MY PATIENTS EARLY,—DRESS IN THE
BROUGHAM,—THERE I AM! (and we hope he may have a good
run).
[We have been obliged to take the side of the carriage
out, which perhaps the kind reader will excuse.

PATIENCE REWARDED.
Piscator. A-HAH! GOT YOU AT LAST, HAVE I?—AND A FINE WEEK'S
TROUBLE I'VE HAD TO CATCH YOU!

SERVANTGALISM.—No. X.
Servant Gal. I TELL YOU WHAT, COOK; WITH MY BEAUTY AND
FIGGER, I AIN'T A GOIN' TO STOP IN SARVICE NO LONGER; I
SHALL BE ORF TO HORSETRAYLIER.

JOHN THOMAS NON-PLUSHED.
Tax Collector. JOHN THOMAS MOONCALF?
John Thomas. —ESQUIRE, THAT'S ME!

Tax Collector. THEN BE SO GOOD AS TO FILL UP THIS INCOME-
TAX PAPER AND RETURN IT TO ME BEFORE TWENTY DAYS!
EDUCATION IN THE MINING DISTRICTS.
Jemoimer. BIST THOU A GOIN' TO SKULE, ELOYZA?
Eloyza. NOT HI, JEMOIMER. THEY GID US TEA AND BUNS LARST
WEEK, AND WE SHA'T HAN NO MOORE TILL CUM CRISMUS; SO
MUTHER SAYS AS HOW IT AIN'T NO USE.

UNCONSCIOUS SATIRE.
THERE, BABY DEAR, LOOK AT THE PRETTY SOLDIERS!

AVERAGE WEIGHT OF THE FOOT GUARDS.
Heavy Swell. WHAT'S THE AVERAGE WEIGHT OF THE MEN IN
YOUR REGIMENT, CHARLEY?
Swell in the Guards. DON'T KNOW, I'M SURE—AW—BUT TEN GO
TO THE TON.

Juvenile. I WONDER WHETHER THAT GURL HAS GOT ANY TIN—
FOR I FEEL MOST OWDACIOUSLY INCLINED TO GO AND CUT
THAT FELLOW OUT.
A VISIT TO A DOG-FANCIER.

TRIUMPH OF MIND OVER MATTER.
Old Gent. AND PRAY WHO IS YOUR FRIEND WITH THE COFFEE
POT?
Small Boy. THAT? OH! HE'S MY FAG—HE GETS ME MY BREAKFAST
AND SUCH LIKE, BUT I ALWAYS LEAVE HIM SOME CRUMPETS—

AND NEVER BULLY HIM!
WHAT, INDEED?
Stern Parent. I TELL YOU, SIR, I WILL NOT ALLOW IT—AND
DON'T LET ME SEE ANY MORE NASTY PIPES OR TOBACCO IN THIS

HOUSE.
Young Williams. BOO-HOO—AND WHAT'S A FELLOW TO DO
WHEN ALL THE MEN OF HIS OWN AGE SMOKE?
DID YOU EVER!
Friend. WELL, SPRAT, MY BOY—AND HOW DO YOU GET ON, NOW
YOU'RE MARRIED?
Sprat. H'M! PRETTY BOBBISH—BUT THERE'S ONE THING MAKES
IT DOOCID UNCOMFORTABLE SOMETIMES—ENTRE NOUS—MRS.
S. IS SO CONFOUNDEDLY JEALOUS OF ME.

MORAL INFLUENCE OF EXECUTIONS.
WHERE 'AVE WE B'N? WHY, TO SEE THE COVE 'UNG, TO BE
SURE!
ADVENTURES OF MR. TOM NODDY.

No. I.
OUR LITTLE FRIEND, TOM NODDY, THINKS THE SEA-WATER WILL
DO HIS MARE'S LEGS A WORLD OF GOOD

No. II.
THE PLAYFUL CREATURE OBJECTS AT FIRST, BUT FINDING THE
PROCESS AGREEABLE, DETERMINES TO HAVE A COMPLETE BATH.

No. III.
LANDING OF TOM NODDY. HIS HORSE HAVING HAD ENOUGH OF
IT, RETURNS TO HIS STABLE.

No. IV.
OUR FRIEND HAS A DAY WITH THE BROOKSIDE HARRIERS.—
WITH HIS USUAL PRUDENCE HE GETS A HORSE ACCUSTOMED TO
THE HILLS.

DOMESTIC ECONOMY.
Newly Married Daughter (whose husband's income is, if anything,
decidedly limited). —AND SEE HERE, PAPA, DEAR, WE ARE
GETTING ON SO BEAUTIFULLY WITH OUR FURNISHING! WE
BOUGHT THESE LOVELY GOLD AND SILVER INDIAN ELEPHANTS
AT A SALE THE OTHER DAY, AND ONLY GAVE FIFTY POUNDS FOR
THEM; WASN'T IT CHEAP? WE ONLY WANT A LITTLE CRACKED
CHINA TO MAKE THE ROOM QUITE COMFORTABLE!

A CAUTIOUS BIRD.
Lobkins. WELL, I DON'T KNOW ABOUT MARRYIN'—FOR YER SEE,
AFTER THE KNOT WAS TIED, SOME OTHER GAL MIGHT BE FALLIN'
IN LOVE WITH ONE—AND THAT WOULD BE SO DOOCED
AWKWARD!

FORTUNE'S FAVOURITE.
First Snob. YOU KNOW THAT JOLLY LITTLE GIRL, JULIA BINKS?
Second Snob. ALL RIGHT, GO AHEAD.
First Snob. WELL! SHE'S BEEN STICKING UP TO ME LIKE BRICKS,
BUT I CAN'T RETURN HER AFFECTION, BECAUSE I'M SO DEUCED
SWEET WITH THE PLANTAGENET GALS.

WANTING IN REVERENCE.
Coster (to extremely genteel person). I SAY, GUVNER, GIVE US A
HIST WITH THIS 'ERE BILIN' O' GREENS!

JEW D'ESPRIT.
Young Sholomunsh (to Young SNOBLEY, who is attired in his very
best). NOW, SIR! LET ME SHELL YOU A NISH SHUIT OF CLOSHE,

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