Discussion 1,2,3,4

Kim attached is the chapter readings please read before doing four discussions. each discussion shows different chapters where information comes from. look below also each discussion must be 300 words each with 2 references including the book I attached for findings. 

book name attached 

Bolman, L.G. and Deal, T.E. (2017) Reframing Organizations, (6th ed.). San Francisco, CA: Jossey-Bass.  

Read chapter 1-2

1. Discussion Topic:  What do the authors mean by reframing organizations and why is it important?

Introduction to Human services leadership 

Bolman & Deal Chapter 1-2

2. Discussion Topic: Are leaders Born or Made?  List the top ten traits of an effective leader.

The Role of the Leader in the Structural Frame

Bolman & Deal Chapters 3-5 

3.Discussion Topic: How do leadership and management differ?

The Human Resource frame 

Bolman & Deal chapters 6, 17 

4.Discussion Topic: How do you motivate employees? 

Management of Human Resources interpersonal & group dynamics  

Bolman & Deal chapters 7-8

CHAPTER 1
INTRODUCTION
THE POWER OF REFRAMING
By the second decade of the twenty-first century, the German carmaker Volkswagen and
the U.S. bank Wells Fargo were among the world’s largest, most successful, and most
admired firms. Then both trashed their own brand by following the same script. It’s a
drama in three acts:

1. Act I: Set daunting standards for employees to improve performance.
2. Act II: Look the other way when employees cheat because they think it’s the only

way to meet the targets.

3. Act III: When the cheating leads to a media firestorm and public outrage, blame the
workers and paint top managers as blameless.

In Wells Fargo’s case, the bank fired more than 5,000 lower-level employees but offered an
exit bonus of $125 million to the executive who oversaw them (Sorkin, 2016).
Volkswagen CEO Martin Winterkorn was known as an eagle-eyed micromanager but
pleaded ignorance when his company admitted in 2015 that it had been cheating for years
on emissions tests of its “clean” diesels. He was quickly replaced by Matthias Müller, who
claimed that he didn’t know anything about VW’s cheating either. Müller also explained
why VW wasn’t exactly guilty: “It was a technical problem. We had not the interpretation of
the American law…We didn’t lie. We didn’t understand the question first” (Smith and
Parloff, 2016). Apparently VW was smart enough to design clever software to fudge
emissions tests but not smart enough to know that cheating might be illegal.
The smokescreen worked for years—VW sold a lot of diesels to consumers who wanted
just what Volkswagen claimed to offer, a car at the sweet spot of low emissions, high
performance, and great fuel economy. The cheating apparently began around 2008, seven
years before it became public, when Volkswagen engineers realized they could not make
good on the company’s public, clean-diesel promises (Ewing, 2015). Bob Lutz, an industry
insider, described VW’s management system as “a reign of terror and a culture where
performance was driven by fear and intimidation” (Lutz, 2015). VW engineers faced a
tough choice. Should they tell the truth and lose their jobs now or cheat and maybe lose
their jobs later? The engineers chose option B. The story did not end happily. In January,
2017, VW pleaded guilty to cheating on emissions tests and agreed to pay a fine of $4.3
billion. In the same week, six VW executives were indicted for conspiring to defraud the
United States.1 In Spring of 2017, VW’s legal troubles appeared to be winding down in the
United States, at a total cost of more than $20 billion, but were still ramping up in Germany,
where authorities had launched criminal investigations (Ewing, 2017).

The story at Wells Fargo was similar. For years, it had successfully billed itself as the
friendly, community bank. It ran warm and fuzzy ads around themes of working together
and caring about people. The ads did not mention that in 2010 a federal judge ruled that
the bank had cheated customers by deliberately manipulating customer transactions to
increase overdraft fees (Randall, 2010), nor that in August, 2016, the bank agreed to pay a

$4.1 million penalty for cheating student borrowers. But no amount of advertising would
have helped in September, 2016, when the news broke that employees in Wells Fargo
branches, under pressure from their bosses to sell more “solutions,” had opened some two
million accounts that customers didn’t want and usually didn’t know about, at least not
until they received an unexpected credit card in the mail or got hit with fees on an account
they didn’t know they had.
None of it should have been news to Wells Fargo’s leadership. Back in 2005, employees
began to call the firm’s human resources department and ethics hotline to report that some
of their coworkers were cheating (Cowley, 2016). The bank sometimes solved that problem
by firing the whistleblowers. Take the case of a branch manager in Arizona. While covering
for a colleague at another branch, he found that employees were opening accounts for fake
businesses. He called HR, which told him to call the ethics hotline. Ethics asked him for
specific data to support the allegations. He pulled data from the system and reported it. A
month later, he was fired for improperly looking up account information.
In 2013, the Los Angeles Times ran a story about phony accounts in some local branches.
Wells Fargo’s solution was not to lower the flame under the pot but to try and screw down
the lid even tighter. They kept up the intense push for cross-selling but sent employees to
ethics seminars where they were instructed not to open accounts customers didn’t want.
CEO John Stumpf achieved plausible deniability by proclaiming that he didn’t want “want
anyone ever offering a product to someone when they don’t know what the benefit is, or
the customer doesn’t understand it, or doesn’t want it, or doesn’t need it” (Sorkin, 2016, p.
B1). But despite his public assurances, the incentives up and down the line still rewarded
sales rather than ethical squeamishness. Many employees felt they were in a bind: they’d
been told not to cheat, but that was the best way to keep their jobs (Corkery and Cowley,
2016). Like the VW engineers, many decided to cheat now and hope that later never came.

Maybe leaders at Volkswagen and Wells Fargo knew about the cheating and hoped it would
never come to light. Maybe they were just out of touch. Either way, they were clueless—
failing to see that their companies were headed for costly public-relations nightmares. But
they are far from alone. Cluelessness is a pervasive affliction for leaders, even the best and
brightest. Often it leads to personal and institutional disaster. But, sometimes there are
second chances.
Consider Steve Jobs. He had to fail before he could succeed. Fail he did. He was fired from
Apple Computer, the company he founded, and then spent 11 years “in the wilderness”
(Schlender, 2004). During this time of reflection he discovered capacities as a leader—and
human being—that set the stage for his triumphant second act at Apple.
He failed initially for the same reason that countless managers stumble: like the executives
at VW and Wells Fargo, Jobs was operating on a limited understanding of leadership and
organizations. He was always a brilliant and charismatic product visionary. That enabled
him to take Apple from startup to major computer vendor, but didn’t equip him to lead
Apple to its next phase. Being fired was painful, but Jobs later concluded that it was the best
thing that ever happened to him. “It freed me to enter one of the most creative periods of
my life. I’m pretty sure none of this would have happened if I hadn’t been fired from Apple.
It was awful-tasting medicine, but I guess the patient needed it.”

During his period of self-reflection, Jobs kept busy. He focused on Pixar, a computer
graphics company he bought for $10 million, and on NeXT, a new computer company that
he founded. One succeeded and the other didn’t, but he learned from both. Pixar became so
successful it made Jobs a billionaire. NeXT never made money, but it developed technology
that proved vital when Jobs was recalled from the wilderness to save Apple from a death
spiral.
His experiences at NeXT and Pixar provided two vital lessons. One was the importance of
aligning an organization with its strategy and mission. He understood more clearly that he
needed a great company to build great products. Lesson two was about people. Jobs had
always understood the importance of talent, but now he had a better appreciation for the
importance of relationships and teamwork.
Jobs’s basic character did not change during his wilderness years. The Steve Jobs who
returned to Apple in 1997 was much like the human paradox fired 12 years earlier—
demanding and charismatic, charming and infuriating, erratic and focused, opinionated and
curious. The difference was in how he interpreted what was going on around him and how
he led. To his long-time gifts as a magician and warrior, he had added newfound capacities
as an organizational architect and team builder.
Shortly after his return, he radically simplified Apple’s product line, built a loyal and
talented leadership team, and turned his old company into a hit-making machine as reliable
as Pixar. The iMac, iPod, iPhone, and iPad made Jobs the world’s most admired chief
executive, and Apple passed ExxonMobil to become the world’s most valuable company.
His success in building an organization and a leadership team was validated as Apple’s
business results continued to impress after his death in October 2011. Like many other
executives, Steve Jobs seemed to have it all until he lost it—but most never get it back.
Martin Winterkorn had seemed to be on track to make Volkswagen the world’s biggest car
company, and Wells Fargo CEO John Stumpf was one of America’s most admired bankers.
But both became so cocooned in imperfect worldviews that they misread their
circumstances and couldn’t see other options. That’s what it means to be clueless. You
don’t know what’s going on, but you think you do, and you don’t see better choices. So you
do more of what you know, even though it’s not working. You hope in vain that steady on
course will get you where you want to go.
How do leaders become clueless? That is what we explore next. Then we
introduce reframing—the conceptual core of the book and our basic prescription for sizing
things up. Reframing requires an ability to think about situations from more than one
angle, which lets you develop alternative diagnoses and strategies. We introduce four
distinct frames—structural, human resource, political, and symbolic—each logical and
powerful in capturing a detailed snapshot. Together, they help to paint a more
comprehensive picture of what’s going on and what to do.

Virtues and Drawbacks of Organized Activity
There was little need for professional managers when individuals mostly managed their
own affairs, drawing goods and services from family farms and small local businesses.
Since the dawn of the industrial revolution some 200 years ago, explosive technological

and social changes have produced a world that is far more interconnected, frantic, and
complicated. Humans struggle to avoid drowning in complexity that continually threatens
to pull them in over their heads (Kegan, 1998). Forms of management and organization
effective a few years ago are now obsolete. Sérieyx (1993) calls it the organizational big
bang: “The information revolution, the globalization of economies, the proliferation of
events that undermine all our certainties, the collapse of the grand ideologies, the arrival of
the CNN society which transforms us into an immense, planetary village—all these shocks
have overturned the rules of the game and suddenly turned yesterday’s organizations into
antiques” (pp. 14–15).
Benner and Tushman (2015) argue that the twenty-first century is making managers’
challenges ever more vexing:
The paradoxical challenges facing organizations have become more numerous and
strategic (Besharov & Smith, 2014; Smith & Lewis, 2011). Beyond the innovation
challenges of exploration and exploitation, organizations are now challenged to be local
and global (e.g., Marquis & Battilana, 2009), doing well and doing good (e.g., Battilana &
Lee, 2014; Margolis & Walsh, 2003), social and commercial (e.g., Battilana & Dorado, 2010),
artistic or scientific and profitable (e.g., Glynn, 2000), high commitment and high
performance (e.g., Beer & Eisenstadt, 2009), and profitable and sustainable (e.g., Eccles,
Ioannou, & Serafeim, 2014; Henderson, Gulati, & Tushman, 2015; Jay, 2013). These
contradictions are more prevalent, persistent, and consequential. Further, these
contradictions can be sustained and managed, but not resolved (Smith, 2014).

The demands on managers’ wisdom, imagination and agility have never been greater, and
the impact of organizations on people’s well-being and happiness has never been more
consequential. The proliferation of complex organizations has made most human
activities more formalized than they once were. We grow up in families and then start our
own. We work for business, government, or nonprofits. We learn in schools and
universities. We worship in churches, mosques, and synagogues. We play sports in teams,
franchises, and leagues. We join clubs and associations. Many of us will grow old and die in
hospitals or nursing homes. We build these enterprises because of what they can do for us.
They offer goods, entertainment, social services, health care, and almost everything else
that we use or consume.

All too often, however, we experience a darker side of these enterprises. Organizations can
frustrate and exploit people. Too often, products are flawed, families are dysfunctional,
students fail to learn, patients get worse, and policies backfire. Work often has so little
meaning that jobs offer nothing beyond a paycheck. If we believe mission statements and
public pronouncements, almost every organization these days aims to nurture its
employees and delight its customers. But many miss the mark. Schools are blamed for “mis-
educating,” universities are said to close more minds than they open, and government is
criticized for corruption, red tape, and rigidity.

The private sector has its own problems. Manufacturers recall faulty cars or inflammable
cellphones. Producers of food and pharmaceuticals make people sick with tainted products.
Software companies deliver bugs and “vaporware.” Industrial accidents dump chemicals,
oil, toxic gas, and radioactive materials into the air and water. Too often, corporate greed,

incompetence, and insensitivity create havoc for communities and individuals. The bottom
line: We seem hard-pressed to manage organizations so that their virtues exceed their
vices. The big question: Why?

Management’s Track Record
Year after year, the best and brightest managers maneuver or meander their way to the
apex of enterprises great and small. Then they do really dumb things. How do bright people
turn out so dim? One theory is that they’re too smart for their own good. Feinberg and
Tarrant (1995) label it the “self-destructive intelligence syndrome.” They argue that smart
people act stupid because of personality flaws—things like pride, arrogance, and an
unconscious desire to fail. It’s true that psychological flaws have been apparent in brilliant,
self-destructive individuals such as Adolf Hitler, Richard Nixon, and Bill Clinton. But on the
whole, the best and brightest have no more psychological problems than everyone else.
The primary source of cluelessness is not personality or IQ but a failure to make sense of
complex situations. If we misread a situation, we’ll do the wrong thing. But if we don’t
know we’re seeing things inaccurately, we won’t understand why we’re not getting the
results we want. So we insist we’re right even when we’re off track.
Vaughan (1995), in trying to unravel the causes of the 1986 disaster that destroyed
the Challenger space shuttle and its crew, underscored how hard it is for people to
surrender their entrenched conceptions of reality:
They puzzle over contradictory evidence, but usually succeed in pushing it aside—until
they come across a piece of evidence too fascinating to ignore, too clear to misperceive, too
painful to deny, which makes vivid still other signals they do not want to see, forcing them
to alter and surrender the world-view they have so meticulously constructed (p. 235).
So when we don’t know what to do, we do more of what we know. We construct our own
psychic prisons and then lock ourselves in and throw away the key. This helps explain a
number of unsettling reports from the managerial front lines:

• Hogan, Curphy, and Hogan (1994) estimate that the skills of one half to three
quarters of American managers are inadequate for the demands of their jobs. Gallup
(2015) puts the number even higher, estimating that more than 80 percent of
American managers lack the talent they need. But most probably don’t realize it:
Kruger and Dunning (1999) found that the less competent people are, the more they
overestimate their performance, partly because they don’t know good performance
when they see it.

• About half of the high-profile senior executives that companies hire fail within two
years, according to a 2006 study (Burns and Kiley, 2007).

• The annual value of corporate mergers has grown more than a hundredfold since
1980, yet evidence suggests that 70 to 90 percent “are unsuccessful in producing
any business benefit as regards shareholder value” (KPMG, 2000; Christensen,
Alton, Rising, and Waldeck, 2011). Mergers typically benefit shareholders of the
acquired firm but hurt almost everyone else—customers, employees, and, ironically,
the buyers who initiated the deal (King et al., 2004). Stockholders in the acquiring
firm typically suffer a 10 percent loss on their investment (Agrawal, Jaffe, and
Mandelker, 1992), while consumers feel that they’re paying more and getting less.

Despite this dismal record, the vast majority of the managers who engineered
mergers insisted they were successful (KPMG, 2000; Graffin, Haleblian, and Kiley,
2016).

• Year after year, management miscues cause once highly successful companies to
skid into bankruptcy. In just the first quarter of 2015, for example, 26 companies
went under, including six with claimed assets of more than $1 billion. (Among the
biggest were the casino giant, Caesars Entertainment, and the venerable electronics
retailer, RadioShack.)

Small wonder that so many organizational veterans nod in assent to Scott Adams’s
admittedly unscientific “Dilbert principle”: “the most ineffective workers are systematically
moved to the place where they can do the least damage—management” (1996, p. 14).

Strategies for Improving Organizations
We have certainly made a noble effort to improve organizations despite our limited ability
to understand them. Legions of managers report to work each day with hope for a better
future in mind. Authors and consultants spin out a torrent of new answers and promising
solutions. Policymakers develop laws and regulations to guide or shove organizations on
the right path.
The most universal improvement strategy is upgrading management talent. Modern
mythology promises that organizations will work splendidly if well managed. Managers are
supposed to see the big picture and look out for their organization’s overall well-being.
They have not always been equal to the task, even when armed with the full array of
modern tools and techniques. They go forth with this rational arsenal to try to tame our
wild and primitive workplaces. Yet in the end, irrational forces too often prevail.
When managers find problems too hard to solve, they hire consultants. The number and
variety of advice givers keeps growing. Most have a specialty: strategy, technology, quality,
finance, marketing, mergers, human resource management, executive search,
outplacement, coaching, organization development, and many more. For every managerial
challenge, there is a consultant willing to offer assistance—at a price.
For all their sage advice and remarkable fees, consultants often make little dent in
persistent problems plaguing organizations, though they may blame the clients for failing
to implement their profound insights. McKinsey & Co., “the high priest of high-level
consulting” (Byrne, 2002a, p. 66), worked so closely with Enron that its managing partner
(Rajat Gupta, who eventually went to jail for insider trading) sent his chief lawyer to
Houston after Enron’s collapse to see if his firm might be in legal trouble.2 The lawyer
reported that McKinsey was safe, and a relieved Gupta insisted bravely, “We stand by all
the work we did. Beyond that, we can only empathize with the trouble they are going
through. It’s a sad thing to see” (p. 68).
When managers and consultants fail, government recurrently responds with legislation,
policies, and regulations. Constituents badger elected officials to “do something” about a
variety of ills: pollution, dangerous products, hazardous working conditions,
discrimination, and low performing schools, to name a few. Governing bodies respond by
making “policy.” But policymakers don’t always understand the problem well enough to get

the solution right, and a sizable body of research records a continuing saga of perverse
ways in which the implementation process undermines even good solutions (Bardach,
1977; Elmore, 1978; Freudenberg and Gramling, 1994; Gottfried and Conchas, 2016;
Peters, 1999; Pressman and Wildavsky, 1973). Policymakers, for example, have been trying
for decades to reform U.S. public schools. Billions of taxpayer dollars have been spent. The
result? About as successful as America’s switch to the metric system. In the 1950s Congress
passed legislation mandating adoption of metric standards and measures. More than six
decades later, if you know what a hectare is or can visualize the size of a 300-gram package
of crackers, you’re ahead of most Americans. Legislators did not factor into their solution
what it would take to get their decision implemented against longstanding custom and
tradition.
In short, the difficulties surrounding improvement strategies are well documented.
Exemplary intentions produce more costs than benefits. Problems outlast solutions. Still,
there are reasons for optimism. Organizations have changed about as much in recent
decades as in the preceding century. To survive, they had to. Revolutionary changes in
technology, the rise of the global economy, and shortened product life cycles have spawned
a flurry of efforts to design faster, more flexible organizational forms. New organizational
models flourish in companies such as Pret à Manger (the socially conscious U.K. sandwich
shops), Google (the global search giant), Airbnb (a new concept of lodging) and Novo-
Nordisk (a Danish pharmaceutical company that includes environmental and social metrics
in its bottom line). The dispersed collection of enthusiasts and volunteers who provide
content for Wikipedia and the far-flung network of software engineers who have developed
the Linux operating system provide dramatic examples of possibilities in the digital world.
But despite such successes, failures are still too common. The nagging question: How can
leaders and managers improve the odds for themselves as well for their organizations?

Framing
Goran Carstedt, the talented executive who led the turnaround of Volvo’s French division in
the 1980s, got to the heart of a challenge managers face every day: “The world simply can’t
be made sense of, facts can’t be organized, unless you have a mental model to begin with.
That theory does not have to be the right one, because you can alter it along the way as
information comes in. But you can’t begin to learn without some concept that gives you
expectations or hypotheses” (Hampden-Turner, 1992, p. 167). Such mental models have
many labels—maps, mind-sets, schema, paradigms, heuristics, and cognitive lenses, to
name a few.3 Following the work of Goffman, Dewey, and others, we have chosen the
label frames, a term that has received increasing attention in organizational research as
scholars give greater attention to how managers make sense of a complicated and
turbulent world (see, e.g., Foss and Webber, 2016; Gray, Purdy, and Ansari, 2015;
Cornelissen and Werner, 2014; Hahn et al., 2014; Maitlis and Christianson, 2014). In
describing frames, we deliberately mix metaphors, referring to them as windows, maps,
tools, lenses, orientations, prisms, and perspectives, because all these images capture part
of the idea we want to convey.

A frame is a mental model—a set of ideas and assumptions—that you carry in your head to
help you understand and negotiate a particular “territory.” A good frame makes it easier to

know what you are up against and, ultimately, what you can do about it. Frames are vital
because organizations don’t come with computerized navigation systems to guide you
turn-by-turn to your destination. Instead, managers need to develop and carry accurate
maps in their heads.
Such maps make it possible to register and assemble key bits of perceptual data into a
coherent pattern—an image of what’s happening. When it works fluidly, the process takes
the form of “rapid cognition,” the process that Gladwell (2005) examines in his best
seller Blink. He describes it as a gift that makes it possible to read “deeply into the
narrowest slivers of experience. In basketball, the player who can take in and comprehend
all that is happening in the moment is said to have ‘court sense’” (p. 44). The military
stresses situational awareness to describe the same capacity.

Dane and Pratt (2007) describe four key characteristics of this intuitive “blink” process:
• It is nonconscious—you can do it without thinking about it and without knowing

how you did it.
• It is very fast—the process often occurs almost instantly.

• It is holistic—you see a coherent, meaningful pattern.

• It results in “affective judgments”—thought and feeling work together so you feel
confident that you know what is going on and what needs to be done.

The essence of this process is matching situational cues with a well-learned mental
framework—a “deeply held, nonconscious category or pattern” (Dane and Pratt, 2007, p.
37). This is the key skill that Simon and Chase (1973) found in chess masters—they could
instantly recognize more than 50,000 configurations of a chessboard. This ability enables
grand masters to play 25 lesser opponents simultaneously, beating all of them while
spending only seconds on each move.
The same process of rapid cognition is at work in the diagnostic categories physicians rely
on to evaluate patients’ symptoms. The Hippocratic Oath to “do no harm”
requires physicians to be confident that they know what they’re up against before
prescribing a remedy. Their skilled judgment draws on a repertoire of categories and clues,
honed by training and experience. But sometimes they get it wrong. One source of error is
anchoring: doctors, like leaders, sometimes lock on to the first answer that seems right,
even if a few messy facts don’t quite fit. “Your mind plays tricks on you because you see
only the landmarks you expect to see and neglect those that should tell you that in fact
you’re still at sea” (Groopman, 2007, p. 65).

That problem tripped up leaders at Volkswagen, Wells Fargo, and countless other
organizations. Organizations are at least as complex as the human body, and the diagnostic
categories less well defined. That means that the quality of your judgments depends on the
information you have at hand, your mental maps, and how well you have learned to use
them. Good maps align with the terrain and provide enough detail to keep you on course. If
you’re trying to find your way around Beijing, a map of Chicago won’t help. In the same
way, different circumstances require different approaches.

Even with the right map, getting around will be slow and awkward if you have to stop and
study at every intersection. The ultimate goal is fluid expertise, the sort of know-how that
lets you think on the fly and navigate organizations as easily as you drive home on a
familiar route. You can make decisions quickly and automatically because you know at a
glance where you are and what you need to do next.

There is no shortcut to developing this kind of expertise. It takes effort, time, practice, and
feedback. Some of the effort has to go into learning frames and the ideas behind them.
Equally important is putting the ideas to use. Experience, one often hears, is the best
teacher, but that is true only if one learns from it. McCall, Lombardo, and Morrison (1988, p.
122) found that a key quality among successful executives was they were great learners,
displaying an “extraordinary tenacity in extracting something worthwhile from their
experience and in seeking experiences rich in opportunities for growth.”

Reframing
Frames define the questions we ask and solutions we consider (Berger 2014). John Dewey
defined freedom as the power to choose among known alternatives. When managers’
options are limited they make mistakes but too often fail to understand the source. Take a
simple example: “What is the sum of 5 plus 5?” The only right answer is “10.” Ask a
different way, “What two numbers add up to ten? Now the number of solutions is infinite
(once you include fractions and negative numbers). The two questions differ in how they
are framed. Albert Einstein once observed: “If I had a problem to solve and my whole life
depended on the solution, I would spend the first fifty-five minutes determining the
question to ask, for

CHAPTER 2
SIMPLE IDEAS, COMPLEX ORGANIZATIONS
Precisely one of the most gratifying results of intellectual evolution is the continuous opening
up of new and greater prospects.

—Nikola Tesla1
September 11, 2001 brought a crisp and sunny late-summer morning to America’s east
coast. Perfect weather offered prospects of on-time departures and smooth flights for
airline passengers in the Boston-Washington corridor. That promise was shattered for
four flights bound for California when terrorists commandeered the aircraft. Two of the
hijacked aircraft attacked and destroyed the Twin Towers of New York’s World Trade
Center. Another slammed into the Pentagon. The fourth was deterred from its mission
by the heroic efforts of passengers. It crashed in a vacant field, killing all aboard. Like
Pearl Harbor in December 1941, 9/11 was a day that will live in infamy, a tragedy that
changed forever America’s sense of itself and the world.
Why did no one foresee such a catastrophe? In fact, some had. As far back as 1993,
security experts had envisioned an attempt to destroy the World Trade Center using
airplanes as weapons. Such fears were reinforced when a suicidal pilot crashed a
small private plane onto the White House lawn in 1994. But the mind-set of principals in

the national security network was riveted on prior hijackings, which had almost always
ended in negotiations. The idea of a suicide mission, using commercial aircraft as
missiles, was never incorporated into homeland defense procedures.
In the end, 19 highly motivated young men armed only with box cutters were able to
outwit thousands of America’s best minds and dozens of organizations that make up the
country’s homeland defense system. Part of their success came from fanatical
determination, meticulous planning, and painstaking preparation. We also find a
dramatic version of an old story: human error leading to tragedy. But even the human-
error explanation is too simple. In organizational life, there are almost always systemic
causes upstream of human failures, and the events of 9/11 are no exception.
The United States had a web of procedures and agencies aimed at detecting and
monitoring potential terrorists. Had those systems worked flawlessly, the terrorists
would not have made it onto commercial flights. But the procedures failed, as did those
designed to respond to aviation crises. Similar failures have marked many other well-
publicized disasters: nuclear accidents at Chernobyl and Three Mile Island, the botched
response to Hurricane Katrina on the Gulf Coast in 2005, and the deliberate downing of
a German jet in 2015 by a pilot who was known to suffer from severe depression. In
business, the fall of giants like Enron and WorldCom, the collapse of the global financial
system, the Great Recession of 2008–2009, and Volkswagen’s emissions cheating
scandal of 2015 are among many examples of the same pattern. Each illustrates a
chain of misjudgment, error, miscommunication, and misguided action that our best
efforts fail to avert.
Events like 9/11 and Katrina make headlines, but similar errors and failures happen
every day. They rarely make front-page news, but they are familiar to most people who
work in organizations. In the remainder of this chapter, we discuss how organizational
complexity intersects with fallacies of human thinking to obscure what’s really going on
and lead us astray. We describe some of the peculiarities of organizations that make
them so difficult to figure out and manage. Finally, we explore how our deeply held and
well-guarded mental models cause us to fail—and how to avoid that trap.

Common Fallacies in Explaining Organizational Problems
Albert Einstein once said that a thing should be made as simple as possible, but no simpler.
When we ask students and managers to analyze cases like 9/11, they often make things
simpler than they really are. They do this by relying on one of three misleading and
oversimplified explanations.
The first and most common is blaming people. This approach casts every failure as a
product of individual blunders. Problems result from egotism, bad attitudes, abrasive
personalities, neurotic tendencies, stupidity, or incompetence. It’s an easy way to explain
anything that goes wrong. After scandals like the ones that hit Volkswagen and Wells Fargo
Bank in 2016, the hunt is on for someone to blame, and top executives became the prime
target of reporters, investigators, and talk-show comedians.
As children, we learned it was important to assign blame for every broken toy, stained
carpet, or wounded sibling. Pinpointing the culprit is comforting. Assigning blame resolves
ambiguity, explains mystery, and makes clear what to do next: punish the guilty. Corporate

scandals often have their share of culpable individuals, who may lose their jobs or even go
to jail. But there is usually a larger story about the organizational and social context that
sets the stage for individual malfeasance. Targeting individuals while ignoring larger
system failures oversimplifies the problem and does little to prevent its recurrence.

Greatest Hits from Organization Studies

Hit Number 8: James G. March and Herbert A.
Simon, Organizations (New York: Wiley, 1958)
March and Simon’s pioneering 1958 book Organizations sought to define an emerging field
by offering a structure and language for studying organizations. It was part of the body of
work that helped Simon earn the 1978 Nobel Prize for economics.
March and Simon offered a cognitive, social-psychological view of organizational behavior,
with an emphasis on thinking, information processing, and decision making. The book
begins with a model of behavior that presents humans as continually seeking to satisfy
motives based on their aspirations. Aspirations at any given time are a function of both
individuals’ history and their environment. When aspirations are unsatisfied, people search
until they find better, more satisfying options. Organizations influence individuals
primarily by managing the information and options, or “decision premises,” that they
consider.
March and Simon followed Simon’s earlier work (1947) in critiquing the economic view of
“rational man,” who maximizes utility by considering all available options and choosing the
best. Instead, they argue that both individuals and organizations have limited information
and limited capacity to process what they have. They never know all the options. Instead,
they gradually alter their aspirations as they search for alternatives. Home buyers often
start with a dream house in mind, but gradually adapt to the realities of what’s available
and what they can afford. Instead of looking for the best option—”maximizing”—
individuals and organizations instead “satisfice,” choosing the first option that seems good
enough.

Organizational decision making is additionally complicated because the environment is
complex. Resources (time, attention, money, and so on) are scarce, and conflict among
individuals and groups is constant. Organizational design happens through piecemeal
bargaining that holds no guarantee of optimal rationality. Organizations simplify the
environment to reduce the demands on limited information-processing and decision-
making capacities. They simplify by developing “programs”—standardized routines for
performing repetitive tasks. Once a program is in place, the incentive is to stay with it as
long as the results are marginally satisfactory. Otherwise, the organization is forced to
expend time and energy to innovate. Routine tends to drive out innovation because
individuals find it easier and less taxing to stick to programmed tasks (which are
automatic, well-practiced, and more certain of success). Thus, a student facing a term-
paper deadline may find it easier to “fritter”—make tea, straighten the desk, text friends,
and browse the Web—than to struggle to write a good opening paragraph. Managers may
sacrifice quality to avoid changing a familiar routine.
March and Simon’s book falls primarily within the structural and human resource views.
But their discussions of scarce resources, power, conflict, and bargaining recognize the

reality of organizational politics. Although they do not use the term framing, March and
Simon affirm its logic as an essential component of choice. Decision making, they argue, is
always based on a simplified model of the world. Organizations develop unique vocabulary
and classification schemes, which determine what people are likely to see and respond to.
Things that don’t fit an organization’s mind-set are likely to be ignored or reframed into
terms the organization can understand.
When it is hard to identify a guilty individual, a second popular option is blaming the
bureaucracy. Things go haywire because organizations are stifled by rules and red tape or
by the opposite, chaos resulting from a lack of clear goals, roles, and rules. One explanation
or the other usually applies. When things aren’t working, then the system needs either
more or fewer rules and procedures, and tighter or looser job descriptions.
By this reasoning, tighter financial controls could have prevented the subprime mortgage
meltdown of 2008. The tragedy of 9/11 could have been thwarted if agencies had had
better protocols for such a terrorist attack. But piling on rules and regulations is a direct
route to bureaucratic rigidity. Rules can inhibit freedom and flexibility, stifle initiative, and
generate reams of red tape. The Commission probing the causes of 9/11 concluded:
“Imagination is not a gift associated with bureaucracy.” When things become too tight, the
solution is to “free up” the system so red tape and rigid rules don’t stifle creativity and bog
things down. An enduring storyline in popular films is the free spirit who triumphs in the
end over silly rules and mindless bureaucrats (examples include the cult classics Office
Space and The Big Lebowski). But many organizations vacillate endlessly between being too
loose and too tight.
A third fallacy attributes problems to thirsting for power. Enron collapsed, you can say,
because key executives were more interested in getting rich and expanding their turf than
in advancing the company’s best interests. This view sees organizations as jungles teeming
with predators and prey. Victory goes to the more adroit, or the more treacherous. You
need to play the game better than your opponents—and watch your back.
Each of these three perspectives contains a kernel of truth but oversimplifies a knottier
reality. Blaming people points to the perennial importance of individual responsibility.
People who are rigid, lazy, bumbling, or greedy do contribute to some of the problems we
see in organizations. But condemning individuals often distracts us from seeing system
weaknesses and offers few workable options. If, for example, the problem is someone’s
abrasive or pathological personality, what do we do? Even psychiatrists find it hard to alter
character disorders, and firing everyone with a less-than-ideal personality is rarely a viable
option. Training can go only so far in ensuring semi-flawless individual performance.
The blame-the-bureaucracy perspective starts from a reasonable premise: Organizations
exist to achieve specific goals. They usually work better when strategies, goals, and policies
are clear (but not excessive), jobs are well defined (but not constricting), control systems
are in place (but not oppressive), and employees behave prudently (but not callously). If
organizations always operated that way, they would presumably work a lot better than
most do. In practice, this perspective is better at explaining how organizations should work
than why they often don’t. Managers who cling to logic and procedures become
discouraged and frustrated when confronted by intractable irrational forces. Year after
year, we witness the introduction of new control systems, hear of new ways to reorganize,
and are dazzled by emerging management strategies, methods, and gurus. Yet old problems

persist, seemingly immune to every rational cure we devise. As March and Simon point out,
rationality has limits.
The thirst-for-power view highlights enduring, below-the-surface features of organizations.
Dog-eat-dog logic offers a plausible analysis of almost anything that goes wrong. People
both seek and despise power but find it a convenient way to explain problems and get their
way. Within hours of the 9/11 terror attacks, a senior FBI official called Richard Clarke,
America’s counterterrorism czar, to tell him that many of the terrorists were known
members of Al Qaeda.

“How the fuck did they get on board then?” Clarke exploded.

“Hey, don’t shoot the messenger. CIA forgot to tell us about them.”
In the context of its chronic battles with the CIA, the FBI was happy to throw the CIA under
the bus: “We could have stopped the terrorists if CIA had done their job.”
The tendency to blame what goes wrong on people, the bureaucracy, or the thirst for
power is part of our mental wiring. But there’s much more to understanding a complex
situation than assigning blame. Certain universal peculiarities of organizations make them
especially difficult to understand or decipher.

Peculiarities of Organizations
Human organizations can be exciting and challenging places. That’s how they are often
depicted in management texts, corporate annual reports, and fanciful managerial thinking.
But they can also be deceptive, confusing, and demoralizing. It is a big mistake to assume
that organizations are either snake pits or rose gardens (Schwartz, 1986). Managers need
to recognize characteristics of life at work that create opportunities for the wise as well as
hidden traps for the unwary. A case from the public sector provides a typical example:

When Bosses Rush In
Helen Demarco arrived in her office to discover a clipping from the local paper. The
headline read, “Osborne Announces Plan.” Paul Osborne had arrived two months earlier as
Amtran’s new chief executive. His mandate was to “revitalize, cut costs, and improve
efficiency.”
After 20 years, Demarco had achieved a senior management position at the agency. She had
little contact with Osborne, but her boss reported to him. Demarco and her colleagues had
been waiting to learn what the new chief had in mind. She was startled as she read the
newspaper account. Osborne’s plan made technical assumptions directly related to her
area of expertise. “He might be a change agent,” she thought, “but he doesn’t know much
about our technology.” She immediately saw the new plan’s fatal flaws. “If he tries to
implement this, it’ll be the worst management mistake since the Edsel.”

Two days later, Demarco and her colleagues received a memo instructing them to form a
committee to work on the revitalization plan. When the group convened, everyone agreed
it was crazy.

“What do we do?” someone asked.

“Why don’t we just tell him it won’t work?” said one hopeful soul.

“He’s already gone public! You want to tell him his baby is ugly?”
“Not me. Besides, he already thinks a lot of us are deadwood. If we tell him it’s no good, he’ll
just think we’re defensive.”
“Well, we can’t go ahead with it. It’ll never work and we’d be throwing away money.”

“That’s true,” said Demarco thoughtfully. “But what if we tell him we’re conducting a study
of how to implement the plan?”
Her suggestion was approved overwhelmingly. The group informed Osborne that they
were moving ahead on the “implementation study” and expected excellent results. They got
a substantial budget to support their “research.” They did not say that the real purpose was
to buy time and find a way to minimize the damage without alienating the boss.
Over time, the group assembled a lengthy technical report, filled with graphs, tables, and
impenetrable jargon. The report offered two options. Option A, Osborne’s original plan, was
presented as technically feasible but well beyond anything Amtran could afford. Option B,
billed as a “modest downscaling” of the original plan, was projected as a more cost-effective
alternative.

When Osborne pressed the group on the huge cost disparity between the two proposals, he
received a barrage of complicated cost-benefit projections and inscrutable technical terms.
Hidden in a fog was the reality that even Option B offered few benefits at a very high cost.
Osborne argued and pressed for more information. But given the apparent facts, he agreed
to proceed with Option B. The “Osborne plan” was announced with fanfare and widely
heralded as another instance of Paul Osborne’s talent for revitalizing ailing organizations.
Osborne had moved on to work his management magic on another organization by the time
the plan came online, and his successor had to defend the underwhelming results.
Helen Demarco came away with deep feelings of frustration and failure. The Osborne plan,
in her view, was a wasteful mistake, and she had knowingly participated in a charade. But,
she rationalized to herself, she had no other choice. Osborne was adamant. It would have
been career suicide to try to stop him.

You might have noticed that Helen Demarco’s case is more than a little similar to the
scandals at Volkswagen in 2015 and Wells Fargo in 2016. At the Geneva International
Motor Show in 2012, VW CEO Martin Winterkorn proclaimed that by 2015 the company
would cut its vehicles’ carbon dioxide emissions by 30 percent from 2006 levels. It was an
ambitious goal that would have beat the targets set by European regulators to combat
global warming.

But just like Paul Osborne, Winterkorn had set the bar too high. The engineers saw no way
to meet the boss’s goals, but no one wanted to tell him it couldn’t be done. So, they cheated
instead. There was a precedent because VW’s cheating on diesel emissions had started
back in 2008, and observers reported that “an ingrained fear of delivering bad news to
superiors” (Ewing, 2015, p. B3) was a feature of VW’s culture.

Like Helen Demarco and her colleagues, the VW engineers had other options but couldn’t
see them. Paul Osborne and Martin Winterkorn both thought they were providing bold

leadership to vault their organizations forward. They were tripped up in part by human
fallibility but also by how hard it can be to know what’s really going on in any organization.
Managerial wisdom and artistry require a well-honed understanding of four key
characteristics of organizations.
First, organizations are complex. The behavior of the people who populate them is
notoriously hard to predict. Large organizations in particular include a bewildering array of
people, departments, technologies, strategies. and goals. Moreover, organizations are open
systems dealing with a changing, challenging, and erratic environment. Things can get even
messier across multiple organizations. The 9/11 disaster resulted from a chain of events
that involved several separate systems. Almost anything can affect everything else in
collective activity, generating causal knots that are hard to untangle. After an exhaustive
investigation, our picture of 9/11 is woven from sundry evidence, conflicting testimony,
and conjecture.
Second, organizations are surprising. What you expect is often not what you get. Paul
Osborne saw his plan as a bold leap forward; Helen and her group considered it an
expensive albatross. In their view, Osborne was going to make matters worse by trying to
improve them. He might have achieved better results by spending more time with his
family and letting his organization take care of itself. Martin Winterkorn was stunned when
the hidden cheating blew up in his face, costing him his job and hitting VW with devastating
financial and reputational damage.

The solution to yesterday’s problems often creates tomorrow’s obstacles. A friend of ours
headed a retail chain. In the firm’s early years, he had a problem with two sisters who
worked in the same store. To prevent this from recurring, he established a nepotism policy
prohibiting members of the same family from working for the company. Years later, two
key employees met at work, fell in love, and began to live together. The president was
startled when they asked if they could get married without being fired. Taking action in a
cooperative venture is like shooting a wobbly cue ball into a scattered array of self-directed
billiard balls. Balls bounce in so many directions that it is impossible to know how things
will eventually sort out.

Third, organizations are deceptive. They camouflage mistakes and surprises. After 9/11,
America’s homeland defense organizations tried to conceal their confusion and lack of
preparedness for fear of revealing strategic weaknesses. Volkswagen engineers developed
software whose only purpose was to cheat on emissions tests, hoping that no one would
ever see through their deception. Helen Demarco and her colleagues disguised obfuscation
as technical analysis.
It is tempting to blame deceit on individual weakness. Yet Helen Demarco disliked fraud
and regretted cheating—she simply believed it was her best option. Sophisticated
managers know that what happened to Paul Osborne happens all the time. When a quality
initiative fails or a promising product tanks, subordinates often clam up or cover up. They
fear that the boss will not listen or will kill the messenger. Internal naysayers at
Volkswagen and Wells Fargo Bank were silenced until outsiders “blew the whistle.” A
friend in a senior position in a large government agency put it simply: “Communications in
organizations are rarely candid, open, or timely.”

Fourth, organizations are ambiguous. Complexity, unpredictability, and deception generate
rampant ambiguity, a dense fog that shrouds what happens from day to day. It is hard to
get the facts and even harder to know what they mean or what to do about them. Helen
Demarco never knew how Paul Osborne really felt, how receptive he was to other points of
view, or how open he was to compromise. She and her peers piled on more mystery by
conspiring to keep him in the dark.
Ambiguity has many sources. Sometimes available information is incomplete or vague.
Different people may interpret the same information in a variety of ways, depending on
mind-sets and organizational doctrines. At other times, ambiguity is intentionally
manufactured as a smoke screen to conceal problems or avoid conflict. Much of the time,
events and processes are so intricate, scattered, and uncoordinated that no one can fully
understand—let alone control—the reality. Exhibit 2.1 lists some of the most important
sources of organizational uncertainty.
Exhibit 2.1. Sources of Ambiguity.

• We are not sure what the problem is.

• We are not sure what is really happening.

• We are not sure what we want.
• We do not have the resources we need.

• We are not sure who is supposed to do what.
• We are not sure how to get what we want.

• We are not sure how to determine if we have succeeded.
Source: Adapted from McCaskey (1982).

Organizational Learning
How can lessons be extracted from surroundings that are complex, surprising, deceptive,
and ambiguous? It isn’t easy. Decades ago, scholars debated whether the idea of
organizational learning made sense: Could organizations actually learn, or was learning
inherently individual? That debate lapsed as experience verified instances in which
individuals learned and organizations didn’t, or vice versa. Complex firms such as Apple,
Zappos, and Southwest Airlines have “learned” capabilities far beyond individual
knowledge. Lessons are enshrined in acknowledged protocols and shared cultural codes
and traditions. At the same time, individuals often learn even when systems cannot.

Several perspectives on organizational learning are exemplified in the work of Peter Senge
(1990), Barry Oshry (1995), and Chris Argyris and Donald Schön (1978, 1996). Senge sees
a core-learning dilemma: “We learn best from our experience, but we never directly
experience the consequences of many of our decisions” (p. 23). Learning is relatively easy
when the link between cause and effect is clear. But complex systems often sever that
connection: causes remote from effects, solutions detached from problems, and feedback
absent, delayed, or misleading (Cyert and March, 1963; Senge, 1990). Wells Fargo’s
aggressive push for cross-selling led to cheating from coast to coast, but that was mostly
invisible at headquarters, which kept its eyes on the financial results—until the scandal
blew up.

Senge emphasizes the value of “system maps” that clarify how a system works. Consider
the system created by Robert Nardelli at Home Depot. Nardelli had expected to win the
three-way competition to succeed management legend Jack Welch as CEO of General
Electric. He was stunned when he learned he didn’t get the job. But within a week, he was
hired as Home Depot’s new CEO. He was a big change from the company’s free-spirited
founders, who had built the wildly successful retailer on the foundation of an uninhibited,
entrepreneurial “orange” culture. Managers ran their stores using “tribal knowledge,” and
customers counted on friendly, knowledgeable staff for helpful advice.

Nardelli revamped Home Depot with a heavy dose of command-and-control, discipline, and
metrics. Almost all the top executives and many of the frontline managers were replaced,
often by ex-military hires. At first, it seemed to work—profits improved, and management
experts hailed Nardelli’s success. He was even designated Best Manager of 2004 on the
cover of Business Week (Business Week, 2005). But employee morale and customer service
went steadily downhill. The founders had successfully promoted a “make love to the
customers” ethic, but Nardelli’s toe-the-line stance pummeled Home Depot to last place in
its industry for consumer satisfaction. A website, Home Depot Sucks.com, gave customers a
place to vent their rage. As criticism grew, Nardelli tried to keep naysayers at bay, but his
efforts failed to placate customers, shareholders, or his board. Nardelli abruptly left Home
Depot at the beginning of 2007.
The story is one of many examples of tactics that look good until long-term costs become
apparent. A corresponding systems model might look like Exhibit 2.2. The strategy might
be cutting training to improve short-term profitability, drinking martinis to relieve stress,
offering rebates to entice customers, or borrowing from a loan shark to cover gambling
debts. In each case, the results look good at first, and the costs only emerge much later.

Exhibit 2.2. Systems Model with Delay.
Oshry (1995) agrees that system blindness is widespread but highlights causes rooted in
troubled relationships between groups that have little grasp of what’s going on outside
their own neighborhood. Top managers feel overwhelmed by complexity, responsibility,
and overwork. They are chronically dissatisfied with subordinates’ lack of initiative
and creativity. Middle managers, meanwhile, feel trapped between contradictory signals
and pressures. The top tells them to take risks but then punishes mistakes. Their
subordinates expect them to intervene with the boss and improve working conditions. Top
and bottom tug in opposite directions, causing those in the middle to feel pulled apart,
confused, and weak. At the bottom, workers feel helpless, unacknowledged, and
demoralized. “They give us bad jobs, lousy pay, and lots of orders but never tell us what’s
really going on. Then they wonder why we don’t love our work.” Unless you can step back
and see how system dynamics create these patterns, you muddle along blindly, unaware of
better options.

Both Oshry and Senge argue that our failure to read system dynamics traps us in cycles of
blaming and self-defense. Problems are always someone else’s fault. Unlike Senge, who
sees gaps between cause and effect as primary barriers to learning, Argyris and Schön

emphasize managers’ fears and defenses. As a result, “the actions we take to promote
productive organizational learning actually inhibit deeper learning” (1996, p. 281).
According to Argyris and Schön, our behavior obstructs learning because we avoid
undiscussable issues and tiptoe around organizational taboos. That often seems to work
because we avoid conflict and discomfort in the moment, but we create a double bind. We
can’t solve problems without dealing with issues we have tried to hide but discussing them
would expose our cover up. Facing that double bind, Volkswagen engineers hid their

CHAPTER 3
GETTING ORGANIZED
Organizing is what you do before you do something, so that when you do it, it is not all mixed
up.

—A. A. Milne
Watching an eight-oar racing crew skim along the Charles River is like watching a highly
choreographed ballet group perform Swan Lake. To a coxswain’s cadence, eight oars at
exactly 90 degrees enter the water in unison. A collective pull “in swing” propels the
shell smoothly forward as eight oars leave the water at a precise perpendicular angle. If
any oarsman muffs just one of these strokes or “catches a crab,” the shell is thrown off
kilter. Close coordination welds eight rowers into a harmonious crew.
It looks straightforward to an outside observer, an effortless ballet in motion. But
structurally it is more complicated. All members of a crew are expected to row smoothly
and quickly. But expectations for individuals vary depending on the seat they occupy.
Bow seats one, two, and three have the greatest potential to disrupt the boat’s direction,
so they must be able to pull a perfect oar one stroke after another. Rowers in seats four,
five, and six are the boat’s biggest and strongest. They are often referred to as the
“engine,” providing the boat’s raw power. Seat seven’s rower provides a conduit
between the engine room and the “stroke oar” in seat eight. The “stroke oar” sits directly
facing the coxswain and rows at the requested rate of speed and power, setting the
pace and intensity for the other rowers.
The coxswain is responsible for steering the shell, but also serves as captain.
Coxswains vocally determine both the rate and degree of power of the oar strokes.
They know their rowers physically and psychologically and how to inspire their best
efforts. They also know opponents’ strengths and weaknesses. Before a race, the
coxswain develops a strategy but must be ready to alter it as a situation demands. A
good coxswain is “a quarterback, a cheerleader, and a coach all in one. He or she is a

deep thinker, canny like a fox, inspirational, and in many cases the toughest person in
the boat” (Brown, 2014, p. 232).
The individual efforts are also integrated by shared agreement that the team effort
transcends the individual. All rowers have to optimize their strokes for the benefit of the
boat. Coordination and cooperation among individuals of different statures and
strengths assures the unified and beautiful symphony that a crew in motion becomes. In
crew racing competition, structure is vital to top performance.
Structure is equally critical in larger organizations. Jeff Bezos, one of the world’s most
admired CEOs, is passionate about structure and process at the company he founded,
Internet giant Amazon. He makes the company’s strategy crystal clear. Embracing the
familiar credo that the “customer is always right,” Bezos is riveted on figuring out what
the customer wants and delivering it with speed and precision. His “culture of metrics”
coddles Amazon’s 250 million shoppers, not its quarter million employees.
Amazon tracks its performance against some 500 measurable goals; almost 80 percent
relate directly to customer service. Even the smallest delay in loading a Web page is
carefully scrutinized, because Amazon has found that “…a .01 second delay in page
rendering can translate into a 1 percent drop in customer activity” (Anders, 2012).
Supervisors measure and monitor employees’ performance, observing behavior closely
to see where steps or movements can be streamlined to improve efficiency.
Amazon is a classic example of a highly developed organizational structure—clear
strategy, focus on the mission, well-defined roles, and top-down coordination. Some
employees grumble about the working conditions and the fast pace, but many others
find the tempo exhilarating. Bezos makes it clear: The customer is number one. Period.
Amazon began as an online bookstore, but now it sells almost anything that can be
shipped or downloaded. The company lost money for many years after its founding in
1995. But in recent years, it has been consistently profitable, and its 2015 annual report
noted that it had achieved $100 billion in sales faster than any company in history
(Amazon, 2015).
The benefits of getting structure right are obvious under normal conditions and even
more so when organizational architecture meets unexpected crises. Recall the horror of
9/11 and the breakdown in coordination between New York City’s fire and police
departments as they confronted the aftermath of terrorist strikes on the World Trade
Center. That day saw countless inspiring examples of individual heroism and personal
sacrifice. At the risk of their own lives, emergency personnel rescued thousands of
people. Many died in the effort. But extraordinary individual efforts were hindered or
thwarted by breakdowns in communication, command, and control. Police helicopters
near the north tower radioed that it was near collapse more than twenty minutes before
it fell. Police officers got the warning, and most escaped. But there was no link between
fire and police radios, and the commanders in the two departments could not
communicate because their command posts were three blocks apart. It might not have
helped even if they had talked, because the fire department’s radios were notoriously
unreliable in high-rise buildings.
The breakdown of communication and coordination magnified the death toll—including
121 firefighters who died when the north tower collapsed. The absence of a workable

structure undermined the heroic efforts of highly dedicated, skilled professionals who
gave their all in an unprecedented catastrophe (Dwyer, Flynn, and Fessenden, 2002).
The contrast between Amazon’s operations and the rescue efforts at the World Trade
Center highlights a core premise of the structural lens. The right combination of goals,
roles, relationships, and coordination is essential to organizational performance. This is
true of all organizations: families, clubs, hospitals, military units, businesses, schools,
churches, and public agencies. The right structure combats the risk that individuals,
however talented, will become confused, ineffective, apathetic, or hostile. The purpose
of this chapter and the next two is to identify the basic ideas and inner workings of a
perspective that is fundamental to collective human endeavors.
We begin our examination of the structural frame by highlighting its core assumptions,
origins, and basic forms. The possibilities for designing an organization’s social
architecture are almost limitless, but any option must address two key questions: How
do we allocate responsibilities across different units and roles? And, once we’ve done
that, how do we integrate diverse efforts in pursuit of common goals? In this chapter, we
explain these basic issues, describe the major options, and discuss imperatives to
consider when designing a structure to fit the challenges of a unique situation.

Structural Assumptions
The central beliefs of the structural frame reflect confidence in rationality and faith that a
suitable array of roles and responsibilities will minimize distracting personal static and
maximize people’s performance on the job. Where the human resource approach (to be
discussed in Chapters 6 through 8) emphasizes dealing with issues by changing people
(through coaching, training, rotation, promotion, or dismissal), the structural
perspective argues for putting people in the right roles and relationships. Properly
designed, these formal arrangements support and accommodate both collective goals and
individual differences.

Six assumptions undergird the structural frame:
1. Organizations exist to achieve established goals and objectives and devise strategies

to reach those goals.

2. Organizations increase efficiency and enhance performance through specialization
and appropriate division of labor.

3. Suitable forms of coordination and control ensure that diverse efforts of individuals
and units mesh.

4. Organizations work best when rationality prevails over personal agendas and
extraneous pressures.

5. Effective structure fits an organization’s current circumstances (including its
strategy, technology, workforce, and environment).

6. When performance suffers from structural flaws, the remedy is problem solving and
restructuring.

Origins of the Structural Perspective
The structural view has two principal intellectual roots. The first is the work of industrial
analysts bent on designing organizations for maximum efficiency. The most prominent of
these, Frederick W. Taylor (1911), was the father of time-and-motion studies; he founded
an approach that he labeled “scientific management.” Taylor broke tasks into minute parts
and retrained workers to get the most from each motion and moment spent at work. Other
theorists who contributed to the scientific management approach (Fayol, [1919] 1949;
Urwick, 1937; Gulick and Urwick, 1937) developed principles focused on specialization,
span of control, authority, and delegation of responsibility.
A second pioneer of structural ideas was the German economist and sociologist Max
Weber, who wrote around the beginning of the twentieth century. At the time, formal
organization was a relatively new phenomenon. Patriarchy rather than rationality was still
the primary organizing principle. A father figure—who ruled with almost unlimited
authority and power—dominated patriarchal organizations. He could reward, punish,
promote, or fire on personal whim. Seeing an evolution of new structural models in late-
nineteenth-century Europe, Weber described “monocratic bureaucracy” as an ideal form
that maximized efficiency and norms of rationality. His model outlined several major
features that were relatively novel at the time, although they are commonplace now:

• A fixed division of labor

• A hierarchy of offices

• A set of rules governing performance
• A separation of personal from official property and rights

• The use of technical qualifications (not family ties or friendship) for selecting
personnel

• Employment as primary occupation and long-term career (Weber, 1947)

After World War II, Blau and Scott (1962), Perrow (1986), Thompson (1967), Lawrence
and Lorsch (1967), Hall (1963), and others rediscovered Weber’s ideas. Their work
inspired a substantial body of theory and research amplifying the bureaucratic model. They
examined relationships among the elements of structure, looked closely at why
organizations develop one structure over another, and analyzed the effects of structure on
morale, productivity, and effectiveness.

Greatest Hits from Organization Studies
Hit Number 5: James D. Thompson, Organizations in Action: Social
Science Bases of Administrative Theory (New York: McGraw-Hill,
1967)
“Organizations act, but what determines how and when they will act?” (p. 1). That guiding
question opens Thompson’s compact, tightly reasoned book. He answers that
“organizations do some of the basic things they do because they must—or else! Because
they are expected to produce results, their actions are expected to be reasonable, or

rational” (p. 1). As Thompson sees them, organizations operate under “norms of
rationality,” but uncertainty makes rationality hard to achieve. “Uncertainties pose major
challenges to rationality, and we will argue that technologies and environments are basic
sources of uncertainty for organizations. How these facts of organizational life lead
organizations to design and structure themselves needs to be explored” (p. 1).

Thompson looked for a way to meld two distinct ways of thinking about organizations. One
was to see them as closed, rational systems (as in Taylor’s scientific management and
Weber’s theory of bureaucracy). The second viewed them as open, natural systems in
which “survival of the system is taken to be the goal, and the parts and their relationships
are presumably determined through evolutionary processes” (p. 6). Thompson tried to
build on a “newer tradition” emerging from the work of March and Simon (1958, number 8
of our greatest hits in organization studies) and Cyert and March (1963, number 3). This
tradition viewed organizations as “problem facing and problem solving” in a context of
limited information and capacities.
With these premises, Thompson developed a series of propositions about how
organizations design and manage themselves as they seek rationality in an uncertain
world. The two primary sources of uncertainty, in his view, are technology and the
environment. He distinguished three kinds of technology—pooled, sequential, and
reciprocal—each making different demands on communication and coordination. Because
demands and intrusions from the environment threaten efficiency, organizations try to
increase their ability to anticipate and control the environment and attempt to insulate
their technical core from environmental fluctuations. Still another source of uncertainty is
the “variable human.” The more uncertainty an organization faces, the more discretion
individuals need to cope with it, but there is the risk that discretion will run amok.
“Paradoxically, the administrative process must reduce uncertainty but at the same time
search for flexibility” (Thompson, pp. 157–158).

Strategy
Strategy comes from a Greek word that originally referred to the art of military leaders. It
was imported into the business context in the twentieth century as a way to talk about an
organization’s overall approach to goals and methods. Strategy has been defined in many
ways. Mintzberg (1987), for example, offers five of them, all beginning with the letter P:

1. Plan: a conscious and intentional course of action.
2. Perspective: an organization’s way of framing where it wants to go and how it

intends to get there.
3. Pattern: a consistent pattern of decisions.
4. Position: the way an organization positions itself in relationship to its environment.
5. Ploy: a plan or decision whose purpose is to provoke a reaction from competitors.

Some of Mintzberg’s Ps focus on thinking while others are more about action. All are
elements of a coherent strategy. Roberts (2004) argues that the job of the general manager
is to define a strategy that includes objectives, a statement of scope, a specification of the
organization’s competitive advantage, and the logic for how the organization will succeed.

Structural logic dictates that an organization’s success requires alignment of strategy,
structure, and environment. But, as Chandler noted in 1962, “structure follows strategy.” A
good strategy needs to be specific enough to provide direction but elastic enough to adapt
to changing circumstances.
Eastman Kodak provides a classic case in point. Kodak developed a strategy that made it a
dominant player in the film industry for many decades, but stayed with its approach
too long and finally ended in bankruptcy. In 1880, George Eastman developed a formula for
gelatin-based dry plates, the basis for the then nascent field of photography. For the next
125 years the company’s strategy sought to capitalize on this technology by introducing
products such as the Kodak Brownie camera, Kodachrome, the Kodak Instamatic camera,
and gold standard motion picture film—as well as producing thousands of patents in
related fields. Pursuing this strategy the company’s performance soared. At its zenith,
Kodak employed over 145,000 people and earned billions of dollars in sales (Brachmann,
2014). It was one of America’s best-known and most-admired companies.
Threats to Kodak’s film-based strategy surfaced as early as 1950 with the introduction of
instant photography and the Polaroid camera. In the 1980s, Fujifilm, an upstart Japanese
competitor, was able to mass produce film and sell it at a cheaper price to discount retailers
like Walmart. Kodak couldn’t compete and lost a large share of the film market
(Brachmann, 2014).
The death knell for Kodak came in the midseventies with the invention of the digital
camera. Ironically, it was invented in one of the company’s labs by one of its own engineers.
Upper management’s reaction: “It’s cute but don’t tell anyone about it” (Chunka, 2012).
Kodak’s protection of its film-based strategy and inability to see that digital would capture
the market led to its decline and eventual bankruptcy filing in January, 2012.
What kept Kodak from adapting to a changing world? The strategy led to an organizational
structure that channeled the activities and thinking of top management in one primary
direction: film! In that context, any effort to promote digital cameras required swimming
upstream against a strong current.
A similar thing happened at Xerox. Xerox researchers had developed the concepts for the
graphical user interface and mouse, but the company’s structure and business model were
built around photocopying, not computers. Steve Jobs at Apple and Bill Gates at Microsoft
immediately saw the market potential that Xerox executives missed. Kodak and Xerox, like
many other companies, were never able to capitalize on their own inventions because they
fell outside the corporate strategy. Christensen (1997) calls it “the innovator’s dilemma,”
and notes that one reason firms get stuck in the past is that standard cost-benefit analysis
usually tells them that they will get a better return by investing in the tried and true instead
of something new and unproven. As at Kodak and Xerox, the game is usually lost before the
numbers tell a different story.

Structural Forms and Functions
Structure provides the architecture for pursuing an organization’s strategic goals. It is a
blueprint for expectations and exchanges among internal players (executives,
managers, employees) and external constituencies (such as customers, competitors,

regulators, and clients). Like an animal’s skeleton or a building’s framework, structure both
enhances and constrains what an organization can do. The alternative design possibilities
are virtually infinite, limited only by human preferences and capacities, technological
limits, and constraints in the surroundings.

We often assume that people prefer structures with more choices and latitude (Leavitt,
1978), but this is not always the case. A study by Moeller (1968), for example, explored the
effects of structure on teacher morale in two school systems. One was loosely structured
and encouraged wide participation in decision making. Centralized authority and a clear
chain of command characterized the other. Moeller was surprised to find the opposite of
what he expected: Faculty morale was higher in the district with a tighter structure.
Teachers seemed to prefer clarity of expectations, roles, and lines of authority.
United Parcel Service, “Big Brown,” provides a contemporary example of the benefits of
structural certainty and clarity. In the company’s early days, UPS delivery employees were
“scampering messenger boys” (Niemann, 2007). Since then, computer technology has
curtailed employee discretion, and every step from pickup to delivery is highly
programmed. Detailed instructions specify placement of packages on delivery trucks.
Drivers follow computer-generated routes (which minimize mileage and left turns to save
time and gas). Newly scheduled pickups automatically download into the nearest driver’s
route plan.
UPS calculates in advance the numbers of steps to your door. If a driver sees you while
walking briskly to your door, you’ll receive a friendly greeting. Look carefully and you’ll
probably notice the automated van lock the driver carries. Given such a tight leash, you
might expect demoralized employees. But, the technology makes the job easier and enables
drivers to be more productive. As one driver remarked to us with a smile, “We’re happy
robots.”
Do these examples prove that a tighter structure is better? Sometimes the opposite is true.
Adler and Borys (1996) argue that the type of structure is as important as the amount or
rigidity. There are good rules and bad ones. Formal structure enhances morale if it helps us
get our work done. It has a negative impact if it gets in our way, buries us in red tape, or
makes it too easy for management to control us. Equating structure to rigid bureaucracy
confuses “two very different kinds of machines, those designed to de-skill work and those
designed to leverage users’ skills” (p. 69).
Structure, then, need not be machinelike or inflexible. Structures in stable environments
are often hierarchical and rules oriented. But recent years have witnessed remarkable
inventiveness in designing structures emphasizing flexibility, participation, and quality. A
prime example is BMW, the luxury automaker whose success formula relies on a
combination of stellar quality and rapid innovation. “Just about everyone working for the
Bavarian automaker—from the factory floor to the design studios to the marketing
department—is encouraged to speak out. Ideas bubble up freely and there is never a
penalty for proposing a new way of doing things, no matter how outlandish. The company
has become an industry benchmark for high-performance premium cars, customized
production, and savvy brand management” (Edmondson, 2006, p. 72. Copyright © 2006
McGraw-Hill Companies, Inc.).

Dramatic changes in technology and the business environment have rendered old
structures obsolete at an unprecedented rate, spawning a new interest in organizational
design (Nadler, Gerstein, and Shaw, 1992; Bryan and Joyce, 2007; Roberts, 2004).
Pressures of globalization, competition, technology, customer expectations, and workforce
dynamics have prompted organizations worldwide to rethink and redesign structural
prototypes. A swarm of items compete for managers’ attention—money, markets, people,
and technological competencies, to name a few. But a significant amount of time and
attention must be devoted to social architecture—designing structures that allow people to
do their best:
CEOs often opt for the ad hoc structural change, the big acquisition, or a focus on where and
how to compete. They would be better off focusing on organizational design. Our research
convinces us that in the digital age, there is no better use of a CEO’s time and energy than
making organizations work better. Most companies were designed for the industrial age of
the past century, when capital was the scarce resource, interaction costs were high and
hierarchical authority and vertically integrated structures were the keys to efficient
operation. Today superior performance flows from the ability to fit these structures into
the present century’s very different sources of wealth creation (Bryan and Joyce, 2007, p.
1).

Basic Structural Tensions
Two issues are central to structural design: how to allocate work (differentiation) and how
to coordinate diverse efforts after parceling out responsibilities (integration). Even in a
group as small and intimate as a family, it is important to settle issues concerning who does
what, when the “what” gets done, and how individual efforts mesh to ensure harmony.
Every family will find an arrangement of roles and synchronization that works—or suffer
the fallout.

Division of labor—or allocating tasks—is the keystone of structure. Every living system
creates specialized roles to get important work done. Consider an ant colony: “Small
workers…spend most of their time in the nest feeding the larval broods; intermediate-sized
workers constitute most of the population, going out on raids as well as doing other jobs.
The largest workers…have a huge head and large powerful jaws. These individuals
are…soldiers; they carry no food but constantly run along the flanks of the raiding and
emigration columns” (Topoff, 1972, p. 72).

Like ants, humans long ago discovered the virtues of specialization. A job (or position)
channels behavior by prescribing what someone is to do—or not do—to accomplish a task.
Prescriptions take the form of job descriptions, procedures, routines, protocols, or rules
(Mintzberg, 1979). On one hand, these formal constraints can be burdensome, leading to
apathy, absenteeism, and resistance (Argyris, 1957, 1964). On the other, they help to
ensure predictability, uniformity, and reliability. If manufacturing standards, aircraft
maintenance, hotel housekeeping, or prison sentences were left solely to individual
discretion, problems of quality and equity would abound.

Once an organization spells out positions or roles, managers face a second set of key
decisions: how to group people into working units. They have several basic options
(Mintzberg, 1979):

• Function: Groups based on knowledge or skill, as in the case of a university’s
academic departments or the classic industrial units of research, engineering,
manufacturing, marketing, and finance.

• Time: Units defined by when they do their work, as by shift (day, swing, or
graveyard shift).

• Product: Groups organized by what they produce, such as detergent versus bar
soap, wide-body versus narrow-body aircraft.

• Customer: Groups established around customers or clients, as in hospital wards
created around patient type (pediatrics, intensive care, or maternity), computer
sales departments organized by customer (corporate, government, education,
individual), or schools targeting students in particular age groups.

• Place: Groupings around geography, such as regional or international offices in
corporations and government agencies or neighborhood schools in different parts of
a city.

• Process: Grouping by a complete flow of work, as with “the order fulfillment
process. This process flows from initiation by a customer order, through the
functions, to delivery to the customer” (Galbraith, 2001, p. 34).

Creating roles and units yields the benefits of specialization but creates challenges of
coordination and control—how to ensure that diverse efforts mesh. Units tend to focus
on their separate priorities and strike out on their own, as New York’s police and fire
departments did on 9/11. The result is suboptimization—individual units may perform
splendidly in terms of their own goals, but the whole may add up to much less than the sum
of the parts. This problem plagued Tom Ridge, who was named by President George W.
Bush as the director of homeland security in the aftermath of the 9/11 terrorist attacks. His
job was to resolve coordination failures among the government’s many different units that
dealt with security. But he was more salesman and preacher than boss, and he lacked the
authority to compel compliance. Ridge’s slow progress led President Bush to create a
cabinet-level Department of Homeland Security. The goal was to cluster independent
security agencies under one central authority.
As often happens, the new structure created its own problems. Folding the Federal
Emergency Management Agency into the mix reduced FEMA’s autonomy and shifted its
priorities toward security and away from its core mission of disaster relief. The same
agency that had responded nimbly to hurricanes and earthquakes in the 1990s was slow
and ponderous in the aftermath of Hurricane Katrina and lacked authority and budget to
move without a formal okay from the new Secretary of Homeland Security (Cooper and
Block, 2006).

Successful organizations employ a variety of methods to coordinate individual and group
efforts and to link local initiatives with system-wide goals. They do this in two primary
ways: vertically, through the formal chain of command, and laterally, through meetings,

committees, coordinating roles, or network structures. We next look at each of these
strategies in detail.

Vertical Coordination
With vertical coordination, higher levels coordinate and control the work of subordinates
through authority, rules and policies, and planning and control systems.

Authority
The most basic and ubiquitous way to harmonize the efforts of individuals, units, or
divisions is to designate a boss with formal authority. Authorities—executives, managers,
and supervisors—are charged with keeping action aligned with strategy and objectives.
They do this by making decisions, resolving conflicts, solving problems, evaluating
performance and output, and distributing rewards and sanctions. A chain of command is a
hierarchy of managerial and supervisory strata, each with legitimate power to shape and
direct the behavior of those at lower levels. It works best when authority is both endorsed
by

CHAPTER 4
STRUCTURE AND RESTRUCTURING
When society requires to be rebuilt, there is no use in attempting to rebuild it on the old
plan.

—John Stuart Mill
In 2004, a crisis over journalistic standards ensnared the British Broadcasting
Corporation (BBC) in a flurry of parliamentary hearings, resignations, and public
recrimination. The controversy so tarnished the respected institution’s reputation that
top officials took steps to ensure that it would never happen again.
They initiated a number of structural changes: a journalism board to monitor editorial
policy, guidelines on journalistic procedures, forms to flag trouble spots that managers
were required to complete, and a 300-page volume of editorial guidelines. The
cumulative effect of the changes was a multilayered bureaucracy that limited
managerial discretion and fostered a hierarchy of approve-disapprove boxes. These
were to be passed up the chain of command as an alternative to probing questions at
lower levels in the organization.
Some cures make the patient worse, and this newly restructured system resulted in two
crises more damaging than the one in 2004. In October 2012, the BBC came under

heavy fire when it became known that it had broadcast a glowing tribute to a well-known
former BBC TV host, Jimmy Savile, but killed an investigative report detailing evidence
that Savile had been a serial child molester. The following month, the BBC aired a
report wrongly accusing a member of Margaret Thatcher’s government of being a
pedophile. Postmortem investigations attributed both errors directly to BBC’s
restructured, highly bureaucratized system.
In another case, when Larry Summers, an economist and former treasury secretary,
became president of Harvard University in 2001, he soon concluded that the venerable
university needed a structural overhaul, and he subsequently issued a series of
presidential directives. He attacked the undergraduate grading system, in which half of
the students received As and 90 percent graduated with honors. He stiffened standards
for awarding tenure, encouraged more foreign study, and directed faculty (especially
senior professors) to spend more time with students. He stepped across curricular
boundaries to call for an emphasis on educational reform and more interdisciplinary
courses. He proposed a center for medicine and science to encourage more applied
research. Finally, he announced a bold move to build an additional campus across the
Charles River to house new growth and development. Summers’s initiatives aimed to
tighten Harvard’s famously decentralized structure and to imbue the president’s office
with more clout.
Restructuring worked about as well for Summers as it had for the BBC—he was forced
out after serving the shortest term for a Harvard president in more than a century.
Reorganizing or restructuring is a powerful but high-risk approach to improvement.
Major initiatives to redesign structure and processes often prove neither durable nor
beneficial. Designing a structure, putting all the parts in place, and satisfying every
interested party is difficult and hazardous. Although restructuring is a manager’s
strategy of choice to improve performance, a Boston Group Study estimates 50 percent
of the efforts fail (BSG, 2012). Other estimates put the misfire rate even higher (HBR,
2000).
But it is also true that, over the past 100 years, management innovations such as
decentralization, capital budgeting techniques, and self-governing teams have done
more than any other kind of innovation to allow companies to cross new performance
thresholds (Hamel, 2006). American automakers scratched their heads for 20 years
trying to figure out what made Toyota so successful. They tried all kinds of process
innovations but finally reached the conclusion that Toyota had simply given their
employees more authority to make decisions and solve problems (Hamel, 2006).
An organization’s structure at any moment represents its resolution of an enduring set of
basic tensions or dilemmas, which we discuss in opening this chapter. Then, drawing on
the work of Henry Mintzberg and Sally Helgesen, we describe two views of the
alternatives organizations may consider in aligning structure with mission and
environment. We conclude with case examples illustrating both opportunities and
challenges that managers encounter when attempting to create more workable and
successful structural designs.

Structural Dilemmas

Finding an apt system of authority, roles, and relationships is an ongoing, universal
struggle. Managers rarely face well-defined problems with clear-cut solutions. Instead, they
confront enduring structural dilemmas, tough trade-offs without easy answers.

Differentiation versus Integration
The tension between assigning work and synchronizing sundry efforts creates a classic
dilemma, as seen in Chapter 3. The more complex a role structure (lots of people doing
many different things), the harder it is to sustain a focused, tightly coupled enterprise.
Recall the challenge facing Larry Summers as he tried to bring a higher level of
coordination to a highly decentralized university. As complexity grows, organizations need
more sophisticated—and more costly—coordination strategies. Lateral strategies need to
supplement top-down rules, policies, and commands.

Gap versus Overlap
If key responsibilities are not clearly assigned, important tasks fall through the cracks.
Conversely, roles and activities can overlap, creating conflict, wasted effort, and unintended
redundancy. A patient in a prestigious teaching hospital, for example, called her husband
and pleaded with him to rescue her. She couldn’t sleep at night because hospital staff,
especially nurses’ aides and interns, kept waking her, often to repeat a procedure or
administer a medication that someone else had done a short time before. Conversely, when
she wanted something, pressing her nurses’ call button rarely produced any response.
The new cabinet-level Department of Homeland Security, created in the wake of the 9/11
terrorist attacks, was intended to reduce gaps and overlaps among the many agencies
responsible for responding to domestic threats. Activities incorporated into the new
department included immigration, border protection, emergency management, and
intelligence analysis. Yet the two most prominent antiterrorism agencies, the FBI and the
CIA—with their long history of mutual gaps, overlaps, and bureaucratic squabbling—
remained separate and outside the new agency (Firestone, 2002).

Underuse versus Overload
If employees have too little work, they become bored and get in other people’s way.
Members of the clerical staff in a physician’s office were able to complete most of their
tasks during the morning. After lunch, they filled their time talking to family and friends. As
a result, the office’s telephone lines were constantly busy, making it difficult for patients to
ask questions and schedule appointments. Meanwhile, clients and routine paperwork
swamped the nurses, who were often brusque and curt because they were so busy. Patients
complained about impersonal care. Reassigning many of the nurses’ clerical duties to office
staff created a better structural balance.

Lack of Clarity versus Lack of Creativity
If employees are unclear about what they are supposed to do, they often tailor their roles to
fit personal preferences instead of shaping them to meet system-wide goals. This
frequently leads to trouble. Most McDonald’s customers are not seeking novelty and
surprise in their burgers and fries. But when responsibilities are over-defined, people

conform to prescribed roles and protocols in “bureaupathic” ways. They rigidly follow job
descriptions, regardless of how much the service or product suffers.
“You lost my bag!” an angry passenger shouted, confronting an airline manager.

The manager responded, “How was the flight?”
“I asked about my bag,” said the passenger.

“That’s not my job,” the manager replied. “Check with baggage claim.”

The passenger did not leave as a satisfied customer.

Excessive Autonomy versus Excessive Interdependence
If the efforts of individuals or groups are too autonomous, people often feel isolated.
Schoolteachers may feel lonely and unsupported because they work in self-contained
classrooms and rarely see other adults. Yet efforts to create closer teamwork have
repeatedly run aground because of teachers’ difficulties in working together. In contrast, if
too tightly connected, people in roles and units are distracted and spend too much time on
unnecessary coordination. IBM lost an early lead in the personal computer business in part
because new initiatives required so many approvals—from levels and divisions alike—that
new products were overdesigned and late to market. The same problem hindered Hewlett-
Packard’s ability to innovate in the late 1990s.

Too Loose versus Too Tight
One critical structural challenge is how to hold an organization together without holding it
back. If structure is too loose, people go astray, with little sense of what others are doing.
But rigid structures stifle flexibility and encourage people to waste time trying to beat the
system.
We can see some of the perils of a loose structure in the former accounting firm Andersen
Worldwide, indicted in 2002 for its role in the Enron scandal. Efforts to shred documents
and alter memos at Andersen’s Houston office went well beyond questionable accounting
procedures. At its Chicago headquarters, Andersen had an internal audit team, the
Professional Standards Group, charged with reviewing the work of regional offices. Unlike
other large accounting firms, Andersen let frontline partners closest to the clients overrule
the internal audit team. This fostered local discretion that was a selling point to customers
but came back to haunt the firm. As a result of the lax controls, “the rainmakers were given
the power to overrule the accounting nerds” (McNamee and Borrus, 2002, p. 33).

The opposite problem is common in managed health care. Insurance companies give clerks
far from the patient’s bedside the authority to approve or deny treatment or to review
medical decisions, often frustrating physicians and patients. Doctors lament spending time
talking to insurance representatives that would be better spent seeing patients. Insurance
providers sometimes deny treatments that physicians see as urgent. In one case, a hospital-
based psychologist diagnosed an adolescent as likely to commit sexual assault. The insurer
questioned the diagnosis and denied hospitalization. The next day, the teenager raped a
five-year-old girl.

Goal-less versus Goal-bound

In some situations, few people know what the goals are; in others, people cling closely to
goals long after they have become irrelevant or outmoded. In the 1960s, for example, the
Salk vaccine virtually eradicated polio. This medical breakthrough also brought to an end
the existing goal of the March of Dimes organization, which for years had championed
finding a cure for the crippling disease. The organization rebounded by shifting its strategy
to focus on preventing birth defects.

Irresponsible versus Unresponsive
If people abdicate their responsibilities, performance suffers. However, adhering too rigidly
to policies or procedures can be equally harmful. In public agencies, “street-level
bureaucrats” (Lipsky, 1980) who deal with the public are often asked, “Could you do me
this favor?” or “Couldn’t you bend the rules a little bit in this case?” Turning down every
request, no matter how reasonable, alienates the public and perpetuates images of
bureaucratic rigidity and red tape. But agency workers who are too accommodating create
problems of inconsistency and favoritism.

Structural Configurations
Structural design rarely starts from scratch. Managers search for options among the array
of possibilities drawn from their accumulated wisdom and the experiences of others.
Templates and frameworks can offer options to stimulate thinking. Henry Mintzberg and
Sally Helgesen offer two abstract conceptions of structural possibilities.
Greatest Hits from Organization Studies
Hit Number 7: Michael C. Jensen and William H. Meckling, “Theory
of the Firm: Managerial Behavior, Agency Costs, and Ownership
Structure,” Journal of Financial Economics 1976, 3, 305–360
This classic article, seventh on our list of works most often cited by scholars, focuses on
two central questions:

• What are the implications of the “agency problem”—that is, the conflicts of interest
between principals and their agents?

• Given those conflicts, why do corporations even exist?

An agency relationship is a structural arrangement created whenever one party engages
another to perform a task. Jensen and Meckling’s particular focus is the relationship
between a corporation’s owners (shareholders) and their agents, the managers. Principals
and agents both seek to maximize utility, but their interests often diverge. If you are a sole
proprietor, a dollar of the firm’s money is a dollar of yours as well. But if you are an
employee with no ownership interest, you’re spending someone else’s money when you
pad your expense account or schedule a business meeting at an expensive resort.
One rationale for linking executive compensation to the price of the company’s stock is that
it may reduce the agency problem, but the impact is often marginal at best. A notorious
example is Tyco’s chief executive, Dennis Kozlowski, who reportedly spent more than $30
million of company money to buy, furnish, and decorate his palatial apartment in New York
City (Sorkin, 2002). Nonexecutive shareholders hate this kind of thing, but it is difficult for

them to stay abreast of everything management does, and they can’t do it without incurring
“monitoring costs”—time and money spent on things like supervision and auditing.
One implication the authors draw is that the primary value of stock analysts is the sentinel
function they perform. Analysts’ ability to pick stocks is notoriously poor, but their
oversight puts more heat on managers to serve shareholder interests. The article also
concludes that, despite the agency conflicts, the corporate form still makes economic sense
for the parties involved—managers cost more than owners wish, but they still earn their
keep.

The authors see the agency problem as a pervasive feature of cooperative activity. The
relationship between a team and individual members, or between a boss and a
subordinate, is like that between principal and agent. If members of a team share rewards
equally, for example, there is an incentive for “free riders” to let someone else do most of
the work. Principals face a perennial problem of keeping agents in line and on task.

Mintzberg’s Fives
As the two-dimensional lines and boxes of a traditional organization chart have become
increasingly archaic, students of organizational design have developed a variety of new
structural images. One influential example is Mintzberg’s five-sector “logo,” depicted
in Exhibit 4.1. Mintzberg’s model clusters various functions into groupings and shows their
relative size and influence in response to different strategies and external challenges. His
schema provides a rough atlas of the structural terrain that can help managers get their
bearings. It assists in sizing up the lay of the land before assembling a structure that
conforms to the prevailing circumstances. One of the distinctive features of Mintzberg’s
image is expanding the typical two-dimensional view of structure into a more
comprehensive portrayal. In doing this, he is able to capture more of the complexity and
issues in formal dealings.

Exhibit 4.1. Mintzberg’s Model.
Source: Mintzberg (1979, p. 20). Copyright ©1979. Reprinted by permission of Prentice Hall, Upper
Saddle River, NJ.
At the base of Mintzberg’s image is the operating core, consisting of workers who produce
or provide products or services to customers or clients: teachers in schools, assembly-line
workers in factories, physicians and nurses in hospitals, and flight crews in airlines.
Directly above the operating core is the administrative component: managers who
supervise, coordinate, control, and provide resources for the operators. School
principals, factory supervisors, and echelons of middle management fulfill this role. At the
top of Mintzberg’s figure, senior managers in the strategic apex track developments in the
environment, determine the strategy, and shape the grand design. In school systems, the
strategic apex includes superintendents and school boards. In corporations, the apex
houses the board of directors and senior executives.
Two more components sit alongside the administrative component.
The technostructure houses specialists, technicians, and analysts who standardize,
measure, and inspect outputs and procedures. Accounting and quality control departments
in industry, audit departments in government agencies, and flight standards departments
in airlines perform such functions.

The support staff performs tasks that support or facilitate the work of others throughout
the organization. In schools, for example, the support staff includes nurses, secretaries,
custodians, food service workers, and bus drivers. These people often wield influence far
greater than their station might suggest.

From this basic blueprint, Mintzberg (1979) derived five structural configurations: simple
structure, machine bureaucracy, professional bureaucracy, divisionalized, and adhocracy.
Each creates a unique set of management challenges.
Simple Structure
New businesses typically begin as simple structures with only two levels: the strategic apex
and an operating level. Coordination is accomplished primarily through direct supervision
and oversight, as in a small mom-and-pop operation. Mom or pop constantly monitors
what is going on and exercises complete authority over daily operations. William Hewlett
and David Packard began their business in a garage, as did Apple Computer’s Steve Jobs
and Steve Wozniak. Simple structure has the virtues of flexibility and adaptability. One or
two people control the operation and can turn on a dime when needed. But virtues can
become vices. Authorities can block as well as initiate change, and they can punish
capriciously as well as reward handsomely. A boss too close to day-to-day operations is
easily distracted by immediate problems, neglecting long-range strategic issues. A notable
exception was Panasonic founder Konosuke Matsushita, who promulgated his 250-year
plan for the future of the business when his young company still had less than 200
employees.
Machine Bureaucracy
McDonald’s is a classic machine bureaucracy. Members of the strategic apex make the big
decisions. Managers and standardized procedures govern day-to-day operations. Like other
machine bureaucracies, McDonald’s has large support staffs and a sizable techno-
structure that sets standards for the cooking time of French fries or the assembly of a Big
Mac or Quarter Pounder.

For routine tasks, such as making hamburgers and manufacturing automotive parts, a
machine-like operation is both efficient and effective. A key challenge is how to motivate
and satisfy workers in the operating core. People quickly tire of repetitive work and
standardized procedures. Yet offering too much creativity and personal challenge in, say, a
McDonald’s outlet could undermine consistency and uniformity—two keys to the
company’s success.
Like other machine bureaucracies, McDonald’s deals constantly with tension between local
managers and headquarters. Local concerns and tastes weigh heavily on decisions of
middle managers. Top executives, aided by analysts armed with reams of data, rely more
on generic and abstract information. Their decisions are influenced by corporation-wide
concerns. As a result, a solution from the top may not always match the needs of individual
units. Faced with declining sales and market share, McDonald’s introduced a new food
preparation system in 1998 under the marketing banner “Made for you.” CEO Jack
Greenberg was convinced the new cook-to-order system would produce the fresher, tastier
burgers needed to get the company back on the fast track. However, franchisees soon
complained that the new system led to long lines and frustrated customers. Unfazed by the

criticism, Greenberg invited a couple of skeptical financial analysts to flip burgers at a
McDonald’s outlet in New Jersey so they could see firsthand that the concerns were
unfounded. The experiment backfired. The analysts agreed with local managers that the
system was too slow and decided to pass on the stock (Stires, 2002). The board replaced
Greenberg at the end of 2002.
Professional Bureaucracy
Harvard University affords a glimpse into the inner workings of a professional
bureaucracy. As in other organizations that employ large numbers of highly educated
professionals to perform core activities, Harvard’s operating core is large relative to other
structural parts, although the technostructure has grown in recent years to accommodate
mandated programs such as racial equity or gender sensitivity. At the operating sphere,
each individual school, for example, has its own local approach to teaching evaluations;
there is no university-wide profile developed by analysts. Few managerial levels exist
between the strategic apex and the professors, creating a flat and decentralized profile.
Control relies heavily on professional training and indoctrination. Insulated from formal
interference, professors have almost unlimited academic freedom to apply their expertise
as they choose. Freeing highly trained experts to do what they do best produces many
benefits but leads to challenges of coordination and quality control. Tenured professors, for
example, are largely immune from formal sanctions. As a result, universities have to find
other ways to deal with incompetence and irresponsibility. Faced with a professor whose
teaching performance was moving from erratic to bizarre, a Harvard dean did the one thing
he felt he could do—he relieved the professor of teaching responsibilities while continuing
to pay his full salary. The dean was not very disappointed when the professor quit in anger
(Rosovsky, 1990).
A professional bureaucracy responds slowly to external change. Waves of reform typically
produce little impact because professionals often view any change in their surroundings as
an annoying distraction. The result is a paradox: Individual professionals may strive to be
at the forefront of their specialty, whereas the institution as a whole changes at a glacial
pace. Professional bureaucracies regularly stumble when they try to exercise greater
control over the operating core; requiring Harvard professors to follow standard teaching
methods might do more harm than good.

Harvard president Larry Summers tripped over this challenge in a famous case when he
suggested that superstar African American studies professor Cornel West redirect his
scholarly efforts. Summers gave his advice to West in private, but West’s pique made the
front page of the New York Times (Belluck and Steinberg, 2002). Summers’s profuse public
apologies failed to deter the offended professor from decamping to Princeton, where he
stayed for 14 years before returning to Harvard in 2016. In professional bureaucracies,
professionals often win struggles between the strategic apex and the operating core.
Hospital administrators learn this lesson quickly, and often painfully, in their dealings with
physicians.
Divisionalized Form
In a divisionalized organization (see Exhibit 4.2), the bulk of the work is done in
quasiautonomous units, such as freestanding campuses in a multi-campus university, areas

of expertise in a large multispecialty hospital, or independent business units in a Fortune
500 firm (Mintzberg, 1979). Johnson and Johnson, for example, is among the largest
companies in the world (#39 on the Fortune 500 in 2016). It has 250 operating companies
lodged in virtually every country. Its medical device division is the world’s largest. Its
pharmaceutical division is even bigger. Its consumer products division produces a wide
assortment of well-known brands, such as Neutrogena, Tylenol, Band-Aids, and Rogaine. It
also makes contact lenses and tuberculosis medicines.

Exhibit 4.2. Divisionalized Form.
Source: Mintzberg (1979, p. 393). Copyright © 1979. Reprinted by permission of Pearson
Education, Inc., New York, New York.
Although J&J’s divisions often have little in common, the company’s executives argue that
there is a level of shared synergy and stability that have paid off over time.
Despite setbacks in the Tylenol crisis of 1982 and a series of product recalls in 2010 and
2012, J&J had raised its dividend for 53 consecutive years and was one of only two U.S.
companies with an AAA credit rating.

One of the oldest businesses in the United States, Berwind Corporation began in coal-
mining in 1886. It now houses divisions in business sectors as diverse as manufacturing,
financial services, real estate, and land management. Each division serves a distinct market
and supports its own functional units. Division presidents are accountable to the corporate
office in Philadelphia for specific results: profits, sales growth, and return on investment.
As long as they deliver, divisions have relatively free rein. Philadelphia manages the
strategic portfolio and allocates resources based on its assessment of market opportunities.
Divisionalized structure offers economies of scale, resources, and responsiveness while
controlling economic risks, but it creates other tensions. One is a cat-and-mouse game
between headquarters and divisions. Headquarters wants oversight, while divisional
managers try to evade corporate control:
Our top management likes to make all the major decisions. They think they do, but I’ve seen
one case where a division beat them. I received…a request from the division for a chimney.
I couldn’t see what anyone would do with a chimney…

CHAPTER 5
ORGANIZING GROUPS AND TEAMS
Alone we can do so little; together we can do so much.

—Helen Keller
On May 2, 2011, Stealth Hawk helicopters carried two units of SEAL Team Six Red
Squadron for Operation Neptune Spear—the assault on Osama bin Laden’s lair in
Abbottabad, Pakistan. The outcome of their mission “to interdict a high value target in a
nonpermissive environment” has taken its place in history, though there are conflicting
accounts of the actual combat. The fog of war invites many interpretations.
Red Squadron’s success owed much to awesome weaponry and the unsurpassed
courage and pluck of its highly trained operators. But many after-the-fact commentators
agree that the real secret of its success is the astonishing teamwork built into a SEAL’s
experience from the beginning.
Teamwork is an integral part of Basic Underwater Demolition (BUD/S) training, the
toughest school in the military. Classes begin with 200 recruits, but few make it to the
end of the program. Sometimes no one from a class graduates. Applicants endure
extreme, if not inhuman, physical and mental challenges. Teams of eight are assigned
200-pound inflatable rubber boats that they must carry with them at all times. During
chow time or bathroom breaks, a team member must guard the boat. The team gets
punished for any individual infractions. When anyone drops out, other members of the
team have to fill in. Sometimes a crew of two or three is responsible for the heavy
vessel.
Survivors of the initial BUD/S ordeal move on to SEAL Teams. Those who seek a place
on legendary Team Six apply for the Green Team. Past training intensifies during the
year of Green Team rigor. In addition to tougher physical challenges, candidates for
SEAL Team Six train in intense, close-quarters combat in a simulated terrorist “kill
house,” using live ammunition. An inch or two between men under combat conditions
may mean the difference between life and death. Candidates sometimes wound or kill
teammates during this phase of training. During Green Team exercises, members of the
three Team Six squadrons—Gold, Blue, and Red—choose new men for their units.
The squadrons exist in a relatively simple structure. The Admiral who heads Joint
Secret Operations Command (JSOC) reports directly to the Secretary of Defense, who
in turn answers to the President. Those relations follow strict protocol. The Team Six
commander reports to the head of JSOC and has authority over the leaders who
command the three squadrons; “The heart of each Squadron are the teams, each led by
a senior enlisted SEAL and made up of half a dozen operators apiece…Assault
squadrons are accompanied by intelligence analysts and support personnel” (Owen and

Maurer, 2012, p. 37). Teams consist of snipers, shooters, explosive experts, and other
operators required for a specific mission.
In the case of Operation Neptune Spear these included a translator, a CIA agent, and a
dog named Cairo. The chain of command from the JSOC Admiral to the operators is
clear but very informal: casual civilian dress, first names, very little protocol. But in
battle, Team Six operational units are highly regimented: “Every assaulter knew both his
place in the chain of command and what to do if communications were lost to
operations center” (Pfarrer, 2011, p. 181). The mission’s detailed plan relied on highly
sophisticated intelligence. When the two helicopters landed in bin Laden’s compound,
every operator knew his role and relation to others. Lateral coordination was precise,
achieved mainly through terse “SEAL Talk” and nonverbal hand signals. When one
helicopter crashed, the teams quickly modified their plans and team structure. From
BUD/S training on, a focus on teamwork returned a huge dividend for the operatives of
Red Squadron, Team Six, and the nation. When the team assembled for recognition at
the White House, President Barack Obama asked, “Which of you fired the final round?”
In unison, the members of Red Squadron responded, “We all did!”
Teams that work well regularly make an enormous difference in the business world as
well. Consider “six teams that changed the world” (Fortune, 2006). There was the
remarkable group that Thomas Edison pulled together, including an English machinist, a
Swiss clockmaker, a German glass blower, and a Princeton-trained mathematician.
They worked in concert with Edison’s inventive genius to produce an astonishing array
of novel products, including the phonograph and the lightbulb.
Or how about Lockheed’s legendary Skunk Works, a team that built a series of
breakthrough aircraft: the F-104 Starfighter, the U-2, and SR-71 spy planes? The name
came from the team’s initial quarters—a circus tent with bad odors. It was World War II,
and space was tight. Designers were quartered away from the main offices and worked
side by side with metal workers to help assure that breakthrough designs were practical.
Cumbersome bureaucratic procedures were streamlined by team leader Kelly
Johnson’s “14 rules and practices.” In addition to Skunk Works’ own innovations, the
concept of its team structure has spawned thousands of corporate imitators.
Then, of course, there’s the well-known team of four driven malcontents, later expanded
to dozens, who believed you could build a personal computer easy enough to use and
inexpensive enough to be affordable. Their ultimate goal was to unleash personal
creativity. Steve Jobs of Apple headed up the super-stealth project, housed in a two-
story building near a gas station. Competition with other projects and with Apple’s
leadership was fierce, but, despite the quarreling, the Macintosh was born in 1983,
marking a turning point in the history of personal computing.
MasterCard was struggling in 1997. Six major advertising campaigns had failed to close
the gap with Visa. In desperation the company hired McCann Erickson, who assigned a
creative team of three to the case. The trio’s breakthrough came with the tagline “some
things money can’t buy.” The first ad was set at a baseball game featuring everyday
transactions with the setup, “priceless.” The ad and its successors helped MasterCard
turn the tables on Visa.

Ford faced a difficult challenge in the 1980s. The Japanese were making serious
inroads in the American automobile market. Taurus, Ford’s best-selling car, needed a
major redesign, but executives knew too well of past problems with the design process.
Every function had a different view. Designers initially presented a new concept.
Engineering very often maintained the design was not feasible, finance typically argued
it was too costly, and manufacturing was sure to argue that it couldn’t be built.
Competing voices typically slowed down or shut down the smooth transition from
concept to finished product.
This time, Ford decided too much was at stake and put 700 people, representatives
from each group, in the same place, under a tough manager, to work it out. The concept
was Team Taurus. The result was Motor Trend’s Car of the Year in 1986.
In all these cases, teams of diverse individuals, typically working at a distance from the
existing hierarchy, sparked major breakthroughs. Well-organized small teams have the
ability to produce results that often elude the grasp of large organizations.
Around the globe, much of the work in organizations gets done in groups or teams.
When these units work well, they elevate the performance of ordinary individuals to
extraordinary heights. When teams malfunction, as too often happens, they erode the
potential contributions of even the most talented members. What determines how well
groups perform? As the examples illustrate, the performance of a small group depends
heavily on structural design and clarity. A key ingredient of a top-notch team is an
appropriate blueprint of roles and relationships aligned with common goals or missions.
In this chapter, we explore the structural features of small groups and teams to show
how restructuring can improve group performance. We begin by describing various
design options for teams, accenting the relationship between design and task. Next,
using sports as an analogy, we discuss patterns of team configuration, coordination,
and interdependence suited to different situations. Then we describe the characteristics
of high-performing teams. Finally, we discuss the pros and cons of self-managing
teams—a hot topic in recent years.

Tasks and Linkages in Small Groups
Groups choose among a range of options to develop a structure that maximizes individuals’
contributions while minimizing the chronic problems that plague small groups. The nature
of the work or task provides a key to shaping group structure. Tasks vary in complexity,
clarity, predictability, and volatility (Hærem, Pentland, and Miller, 2015). The task-
structure relationship in small groups is parallel to that in larger organizations.

Contextual Variables
As we saw in Chapter 4, simple tasks align with basic structures—clearly defined roles,
elementary forms of interdependence, and coordination by plan or command. Projects that
are more complex or volatile generally require more complicated structural forms: flexible
roles, reciprocal give-and-take, and synchronization through lateral dealings and
communal feedback. If a situation becomes exceptionally ambiguous and fast paced,
particularly when time is a factor, groups may be unable to make decisions quickly enough
without centralized authority and tight scripts. Planning a SEAL Team Six mission or

transplanting a kidney is not the same as painting a house or setting up a family outing.
Performance and morale suffer, and troubles multiply when groups lack an appropriate
structure.
Getting structure right requires careful consideration of pertinent contextual variables,
some of which are vague or tough to assess:

• What is our mission?
• What actions are required?

• Who should do what?

• Who is in charge?
• How should we make decisions?

• How do we coordinate efforts?
• What do individual members care about most: time, quality, participation?

• What are the special skills and talents of each group member?

• How does this group relate to others?
• How will we determine success?

Some Fundamental Team Configurations
A high percentage of employees’ and managers’ time is spent in meetings and working
groups of three to twelve people. To illustrate design options, we examine several
fundamental structural configurations from studies of five-member teams. These basic
patterns are too simple to apply to larger, more complex systems, but they help to illustrate
how different structural forms respond to a variety of challenges.

The first is a one-boss arrangement; one person has authority over others (see Exhibit 5.1).
Information and decisions flow from the top. Group members offer information to and
communicate primarily with the official leader rather than with one another. This array is
efficient and fast and works best in relatively simple and straightforward situations when it
is easy for the boss to stay on top of things. Circumstances that are more complicated or
volatile can overload the boss, producing delays or bad decisions, unless the person in
charge has an unusual level of skill, expertise, and energy. Subordinates quickly become
frustrated with directives that are late or out of touch.

Exhibit 5.1. One Boss.
A second alternative creates a management level below the boss (see Exhibit 5.2). Two
individuals have authority over specific areas of the group’s work. Information and
decisions flow through them. This arrangement works when a task is divisible; it reduces
the boss’s span of control, freeing up time to concentrate on mission, strategy, or
relationships with higher-ups. But adding a new layer limits access from the lower levels to
the boss. Communication becomes slower and more cumbersome, and may eventually
erode morale and performance.

Exhibit 5.2. Dual Authority.
Another option is a simple hierarchy with a middle manager who reports to the boss and,
in turn, supervises and communicates with others (see Exhibit 5.3). A similar arrangement
at the White House frees the President to focus on mission and external relations while
leaving operational details to the chief of staff. Although this type of hierarchy further
limits access to the top, it can be more efficient than a dual-manager arrangement. At the
same time, friction between operational and top-level managers is commonplace, and
number two may be tempted to usurp number one’s position.

Exhibit 5.3. Simple Hierarchy.
A fourth option is a circle network, where information and decisions flow sequentially from
one group member to another (see Exhibit 5.4). Each can add to or modify whatever comes
around. This design relies solely on lateral coordination and simplifies communication.
Each person has to deal directly with only two others; transactions are therefore easier to
manage. However, one weak link in the chain can undermine the entire enterprise. The
circle can bog down with complex tasks that require more reciprocity.

Exhibit 5.4. Circle Network.
A final possibility sets up what small group researchers call the all-channel, or star,
network (see Exhibit 5.5). This design, familiar to Team Six operators, is similar to
Helgesen’s web of inclusion. It creates multiple connections so that everyone can talk to
anyone else. Information flows freely; decisions sometimes require touching multiple
bases. Morale in an all-channel network is usually high. The arrangement works well if a
task is amorphous or complicated, requiring substantial mutual adjustment, particularly if
each member brings distinct knowledge or skill. But this structure can be time consuming,
and decision making may slow to a crawl, making it cumbersome and inefficient for simpler
undertakings or for groups that have difficulty coming to agreement. It works best when
team members bring well-developed communication skills, enjoy participation, tolerate
ambiguity, embrace diversity, are able to manage conflict, and agree on how the team will
make decisions.

Exhibit 5.5. All-Channel Network.

Teamwork and Interdependence
Even in the relatively simple case of five-person groups, the formal network is critical to
team functioning. In the give-and-take of larger organizations, things get more complicated.
We can get a fresh perspective and sharpen our thinking about structure in groups by
looking beyond typical work organizations. Making the familiar strange often helps the
strange become familiar.
Team sports, among the world’s most popular pastimes, offer a helpful analog to clarify
how teamwork varies depending on the nature of the game. Every competition calls for its
own unique patterns of interaction. Because of this, distinctive structures are required for
different sports. Social architecture is thus remarkably different for baseball, football, and
basketball.

Baseball

Baseball player Pete Rose once noted, “Baseball is a team game, but nine men who meet
their individual goals make a nice team” (Keidel, 1984, p. 8). In baseball, as in cricket and
other bat-and-ball games, a loosely integrated confederacy makes a team. Individual efforts
are mostly autonomous, seldom involving more than two or three players at a time.
Significant distances, particularly on defense, separate players. Loose connections reduce
the need for synchronization among the various positions. The pitcher and catcher need to
coordinate, as do infielders dealing with a ground ball or outfielders playing a high fly. But
batters are alone at the plate, and fielders are often on their own to make a play.

Managers’ decisions are mostly tactical, normally involving individual substitutions or
actions. Managers come and go without seriously disrupting the team’s play. Players can
transfer from one team to another with relative ease. John Updike summed it up well: “Of
all the team sports, baseball, with its graceful intermittence of action, its immense and
tranquil field sparsely salted with poised men in white, its dispassionate mathematics,
seemed to be best suited to accommodate, and be ornamented by, a loner. It is an
essentially lonely game” (Keidel, 1984, pp. 14–15).

Football
American football and other chess-like sports such as rugby and curling create a structural
configuration very different from baseball. These games proceed through a series of moves,
or plays. Between plays, teams plan strategy for the next move. Unlike baseball players,
football players perform in close proximity. Linemen and offensive backs hear, see, and
often touch one another. Each play involves every player on the field. A prearranged plan
links efforts sequentially. The actions of linemen pave the way for the movement of backs; a
defensive team’s field position becomes the starting point for the offense, and vice versa. In
the transition from offense to defense, specialty platoons play a pivotal role.
Efforts of individual players are tightly synchronized. George Allen, former coach of the
Washington Redskins, put it this way: “A football team is a lot like a machine. It’s made up
of parts. If one part doesn’t work, one player pulling against you and not doing his job, the
whole machine fails” (Keidel, 1984, p. 9).
Tight connections among parts require a football team to be well integrated, mainly
through planning and top-down control. The primary units are the offensive, defensive, and
specialty platoons, each with its own coordinator. Under the direction of the head coach,
the team uses scouting reports and other surveillance to develop a strategy or game plan in
advance. During the game, the head coach typically makes strategic decisions. Assistants or
designated players on either offense or defense make tactical decisions (Keidel, 1984).

A football team’s tight-knit character makes it tougher to swap players from one team to
another. Irv Cross, of the Philadelphia Eagles, once remarked, “An Eagles player could
never make an easy transition to the Dallas Cowboys; the system and philosophies are just
too different” (Keidel, 1984, p. 15). Unlike baseball, football requires intricate strategy and
tightly meshed execution.

Basketball
In basketball and similar games, like soccer (football everywhere but North America),
hockey, and lacrosse, players perform in even closer proximity to one another than football

players do. In quick, rapidly moving transitions, offense becomes defense—with the same
players. Efforts of individuals are reciprocal; each player depends on the performance of
others. Each may be involved with any of the others. Anyone can handle the ball or attempt
to score.
Basketball is much like improvisational jazz. Teams require a high level of spontaneous,
mutual adjustment. Everyone is on the move, often in an emerging pattern rather than a
predetermined course. A successful basketball season depends heavily on a flowing
relationship among team members who read and anticipate one another’s moves. Players
who play together a long time develop a sense of what their teammates will do. A team of
newcomers has trouble adjusting to individual predispositions or quirks. Unlike football,
basketball has no platoons. It is wholly a harmonized group effort.
Coaches, who sit or roam the sidelines, serve as integrators. Their periodic interventions
reinforce team cohesion, helping players coordinate laterally on the move. Unlike baseball
teams, basketball teams cannot function as a collection of individual stars. During the 2016
basketball season, the rather dismal performance of the Los Angeles Lakers was attributed
to it being a loose array of individual stars rather than a well-knit unified team. Conversely,
the San Antonio Spurs became one of the most consistently successful teams in
professional basketball by emphasizing teamwork. According to LeBron James, that’s how
the Spurs beat his team in the 2014 NBA championships: “It’s all for the team and it’s never
about the individual. That’s the brand of basketball, and that’s how team basketball should
be played” (Ginsburg, 2014).

Duke University’s women’s basketball success in 2000 documented the importance of
group interdependence and cohesion. The team won because players could anticipate the
actions of others. The individual “I” deferred to the collective “we.” Passing to a teammate
was valued as highly as making the shot. Basketball is “fast, physically close, and crowded,
20 arms and legs in motion, up, down, across, in the air. The better the team, the more
precise the passing into lanes that appear blocked with bodies” (Lubans, 2001, p. 1).

CHAPTER 6
PEOPLE AND ORGANIZATIONS
Who first invented work and tied the free and holy-day rejoicing spirit down to the ever-
haunting importunity of business and, oh, most sad, to this dry drudgery of the desk’s dead
wood?

—Charles Lamb

Is it all dry drugery? Schwartz and Porath (2014) say that’s the reality for white collar
workers, who aren’t eager to go to work, don’t feel they get much appreciation while
they’re there, have trouble getting everything done, and doubt that their work makes
much of a contribution. They arrive home deflated and haunted by round-the-clock
demands.
Schwartz and Porath could have been writing about Amazon where “workers are
encouraged to tear apart one another’s ideas in meetings, toil long and late (emails
arrive past midnight, followed by text messages asking why they were not answered),
and held to standards that the company boasts are ‘unreasonably high’ … [Amazon] is
conducting a little-known experiment in how far it can push white-collar workers,
redrawing the boundaries of what is acceptable” (Kantor and Streitfeld, 2015).
Amazon is tough on the white-collar employees at its Seattle headquarters, and even
tougher on the blue-collar workers who move its goods.
Amazon came under fire in 2011 when workers in an eastern Pennsylvania warehouse
toiled in more than 100-degree heat with ambulances waiting outside, taking away
laborers as they fell. After an investigation by the local newspaper, the company installed
air-conditioning (Kantor and Streitfeld, 2015).
Amazon is not alone. Apple’s design and technological savvy have captured the
affection and loyalty of consumers around the globe, but the company has earned lower
marks for treatment of the offshore workers who make its products. In 2012, the huge
success of products like the iPad and iPhone was great news for Apple but not so good
for the Chinese employees who made them. Long hours, low pay, and intense pressure
to ramp up production triggered strikes and a worker riot that shut one plant down for a
day. Apple’s products were cutting edge, but its people management evoked centuries-
old images of sacrificing people for profits and reinforced popular stereotypes of bosses
as heartless and insensitive (Amar, 2004; Duhigg and Barboza, 2012).
But not all companies view employees as merely a means to the greater end of profits,
as a contrasting case illustrates:
Early one March afternoon, three electricians who worked for Nucor Corporation got
bad news. In Hickman, Arkansas, the company’s steel mill was dead in the water
because its electric grid had failed. All three employees dropped what they were doing
to head for Arkansas. One drove from Indiana, arriving at 9 PM that night. The other two
flew from North Carolina to Memphis, then drove 2 more hours, arriving after midnight.
All three camped out at the plant and worked 20-hour shifts with local staff to get the
grid back up.
The electricians volunteered—they didn’t need a boss to tell them that Nucor had to get
the mill back on line. Their herculean effort was a big help to the company but brought
them no immediate financial reward, even though their initiative helped Hickman post a
quarterly record for tons of steel shipped (Byrnes and Arndt, 2006).
At Nucor, this story is not particularly unusual:
In an industry as Rust Belt as they come, Nucor has nurtured one of the most dynamic and
engaged workforces around. Its nonunion employees don’t see themselves as worker bees

waiting for instructions from above. Nucor’s flattened hierarchy and emphasis on pushing
power to the front line have given its employees the mindset of owner-operators. It’s a
profitable formula: Nucor’s 387% return to shareholders over the past five years soundly
bests almost all other companies in the Standard & Poor’s 500-stock index (Byrnes and
Arndt, 2006, p. 58).
What’s in it for the workers? Their base pay is nothing special—it’s below the industry
average. But when Nucor has a good year, as it often does, they get big bonuses,
based on their own output and the company’s success. That’s one reason electricians
would grab a plane to help jump-start a plant in Arkansas. It’s also why a new plant
manager at Nucor can expect supportive calls from experienced colleagues who want to
help out. At Nucor, work is more than a job. It’s about pride. Employees enjoy seeing
their names listed on the covers of corporate publications, including the annual report.
They’re proud that their company, which turns scrap metal into steel, is the world’s
largest recycler. And they’re exhilarated when they can draw on their intelligence and
creativity to demonstrate that American workers can still compete.
Companies like Nucor are too rare. In the context of strikes and boycotts across China
protesting “inhumane” management practices at Walmart in late 2016, a company
spokesperson offered the usual boilerplate, “Our employees are our most valuable
asset” (Hernández, 2016). Most companies claim to value their people, but fewer live up
to those words. In practice, employees are often treated as pawns to be moved where
needed and sacrificed when necessary.
In this chapter, we focus on the human side of organizations. We start by summarizing
the assumptions underlying the human resource view. Next, we examine how people’s
needs are either satisfied or frustrated at work. Then we look at today’s changing
employment contract and its impact on both people and organizations.

Human Resource Assumptions
Amazon and Nucor represent different stances in a perennial debate about the relationship
between people and organizations. One side sees individuals as objects or tools, important
not so much in themselves as in what they can do for the organization. The opposing camp
holds that the needs of individuals and organizations can be aligned, engaging people’s
talent and energy while profiting the enterprise. This debate has intensified with
globalization and the growth in size and power of modern institutions. Can people find
freedom and dignity in a world dominated by economic fluctuations and a push for cost
reduction and short-term results? Answers are not easy. They require a sensitive
understanding of people and their symbiotic relationship with organizations.
The human resource frame evolved from early work of pioneers like Mary Parker Follett
(1918) and Elton Mayo (1933, 1945), who questioned a deeply held managerial
assumption that employees had no right beyond a paycheck, and their duty was to work
hard and follow orders. Pioneers of the human resource frame criticized this view on two
grounds: It was unjust, and it was bad psychology. They argued that people’s skills,
attitudes, energy, and commitment are vital resources that can make or break an
enterprise. The human resource frame is built on core assumptions that highlight this
linkage:

• Organizations exist to serve human needs rather than the converse.
• People and organizations need each other. Organizations need ideas, energy, and

talent; people need careers, salaries, and opportunities.
• When the fit between individual and system is poor, one or both suffer. Individuals

are exploited or exploit the organization—or both become victims.

• A good fit benefits both. Individuals find meaningful and satisfying work, and
organizations get the talent and energy they need to succeed.

Organizations ask, “How do we find and retain people with the skills and attitudes to do the
work?” Workers want to know, “How well will this place work for me?” These two
questions are closely related, because “fit” is a function of at least three things: how well an
organization responds to individual desires for useful work; how well jobs let employees
express their skills and sense of self; and how well work fulfills individual financial and
lifestyle needs (Cable and DeRue, 2002).

Human Needs
The concept of need is controversial—at least in some academic circles. Some theorists
argue that the idea is too vague and ethereal. Others say that people’s needs are so variable
and influenced by their surroundings that the concept offers little help in explaining
behavior (Salancik and Pfeffer, 1977). Goal-setting theory (Locke and Latham, 2002, 2004)
suggests that managers do better to emphasize specific performance goals than to worry
about employees’ psychic needs. Economists like Jensen and Meckling (1994) argue that
people’s willingness to trade off one thing for another (time for money or sleep for
entertainment) disproves the idea of need.
Despite this academic skepticism, needs are a central element in everyday psychology.
Parents worry about the needs of their children, politicians promise to meet the needs of
constituents, and managers make an effort to understand the needs of workers. That’s how
Wegmans, a grocery chain that perennially ranks high on Fortune magazine’s list of best
places to work (number two in 2017), states its philosophy: “We set our goal to be the very
best at serving the needs of our customers. Every action we take should be made with this
in mind. We also believe that we can achieve our goal only if we fulfill the needs of our own
people” (Wegmans, 2016).
Common sense tells us that needs are important because we all have them. But identifying
what needs we have—long term or at any given time—is more elusive. A horticultural
analogy may help clarify. A gardener knows that every plant has specific requirements. The
right combination of temperature, moisture, soil, and sunlight allows a plant to grow and
flourish. Plants do their best to get what they need. They orient leaves sunward to get more
light and sink roots deeper in search of water. A plant’s capabilities generally increase with
maturity. Highly vulnerable seedlings become more self-sufficient as they grow (better able
to fend off insects and competition from other plants). These capabilities decline as a plant
nears the end of its life cycle.

Human needs are similar. Conditions or elements in the environment allow people to
survive and grow. Basic needs for oxygen, water, and food are clear; the idea of universal
psychic needs is more controversial. A genetic, or “nature,” perspective posits that certain

psychological needs are essential to being human (Lawrence and Nohria, 2001; Maslow,
1954; McClelland, 1985; Pink, 2009; White, 1960). A “nurture” view, in contrast, suggests
that people are so shaped by environment, socialization, and culture that it is fruitless to
talk about common psychic needs.
In extreme forms, both nature and nurture arguments are misleading. You don’t need an
advanced degree in psychology to recognize that people are capable of enormous amounts
of learning and adaptation. Just about any parent with more than one child knows that
many psychological characteristics, such as temperament, are present at birth.

Most scholars see human behavior as resulting from the interplay between heredity and
environment. Genes initially determine potential and predispositions. Research has
identified connections between genetic patterns and behavioral tendencies such as
antisocial behavior. But learning profoundly modifies innate directives, and research in
behavioral genetics regularly concludes that genes and environment interact in complex
ways to determine how people act (Baker, 2004).
The nature-nurture seesaw suggests a more useful way to think about human needs. A
need can be defined as a genetic predisposition to prefer some experiences over others.
Needs energize and guide behavior and vary in potency at different times. We enjoy the
company of others, for example, yet we sometimes want to be alone. Because genetic
instructions cannot anticipate all situations, both the form and the expression of each
person’s inborn needs are significantly tailored by experiences after birth.

Work and Motivation: A Brief Tour
Why do people do one thing rather than another? Why, for example, do they work hard, or
not hard, or not at all? Despite decades of research, answers remain contested and elusive,
but we can briefly summarize some of the major ideas in an ongoing dialogue.
An old formula (Maier, 1967) tells us that Performance = Ability × Motivation. If you have
both talent and desire, you’ll do well. Theories of motivation seek to explain the desire part
of that formula. One of the oldest views, still popular among many managers and
economists, is that the primary thing people care about is money: they do what they believe
will get them more of it. Playing a hit man in the 2012 film Killing Them Softly, Brad Pitt
summarizes this view with the observation, “America isn’t a country. It’s a business. Now
give me my money.” Money is a powerful incentive, and focusing on financial rewards
simplifies the motivation problem—just offer people money for doing what you want. But
the classic highwayman’s demand—“Your money or your life!”—reminds us that money
isn’t the only thing people care about and is not always the most important thing. Managers
and organizations that focus only on money will miss other opportunities to motivate. But
what else is important beyond money?
A number of theorists have developed models of workplace motivation, and some of the
better-known examples are summarized in Exhibit 6.1. Each model develops its own list of
the things that people want, and no item appears on every list. But there is broad
agreement that people want things that go beyond money, such as doing good work, getting
better at what they do, bonding with other people, and finding meaning and purpose. There
is also alignment with a distinction that was central to Herzberg’s (1966) “two-factor”
theory. Herzberg argued that extrinsic factors, like working conditions and company

policies, can make people unhappy but don’t really motivate them to be more productive.
He insisted that the things that motivate are intrinsic to the work itself—things like
achievement, responsibility, and recognition for work well done. All these theories
converge on the view that motivating people requires understanding and responding to the
range of needs they bring to the workplace.
Exhibit 6.1. Models of Motivation at Work.
Author(s) Needs/Motives at Work
Maslow (1943,
1954)

Hierarchy of needs (physiological, safety, love/belonging, esteem,
self-actualization)

Herzberg, Mausner,
and Snyderman
(1959); Herzberg
(1966)

Two-factor theory:
Motivators/satisfiers: achievement, recognition, work itself,
responsibility, advancement, pay
Hygiene factors/dissatisfiers: company policies, supervision,
interpersonal relationships, working conditions, pay

McClelland (1961) Three needs: achievement, power, affiliation
Hackman and
Oldham (1980)

Three critical psychological states: meaningfulness of work,
responsibility for outcomes, knowledge of results

Lawrence and
Nohria (2002)

Four drives: D1 (acquire objects and experiences that improve our
status relative to others); D2 (bond with others in mutually
beneficial, long-term relationships); D3 (learn about and make sense
of ourselves and the world around us); D4 (defend ourselves, our
loved ones, our beliefs, and our resources)

Pink (2009) Three drives: autonomy (people want to have control over their
work); mastery (people want to get better at what they do); purpose
(people want to be part of something bigger than themselves)

Maslow’s Hierarchy of Needs
One of the oldest and most influential of the models in Exhibit 6.1 was developed by the
existential psychologist Abraham Maslow (1954). He started with the notion that people
are motivated by a variety of wants, some more fundamental than others. The desire for
food dominates the lives of the chronically hungry, but people move on to other things
when they have enough to eat. Maslow grouped human needs into five basic categories,
arrayed in a hierarchy from lowest to highest (Exhibit 6.2).

Exhibit 6.2. Maslow’s Hierarchy of Needs.
Source: Conley, 2007. Copyright © 1979. Reprinted by permission of Pearson Education, Inc., New
York, New York.
In Maslow’s view, basic needs for physical well-being and safety are “prepotent”; they have
to be satisfied first. Once lower needs are fulfilled, individuals move up to social needs (for
belongingness, love, and inclusion) and ego needs (for esteem, respect, and recognition). At
the top of the hierarchy is self-actualization—developing to one’s fullest and actualizing
one’s ultimate potential. The order is not ironclad. Parents may sacrifice themselves for
their children, and martyrs sometimes give their lives for a cause. Maslow believed that
such reversals occur when lower needs are so well satisfied early in life that they recede
into the background later on.
Attempts to validate Maslow’s theory have produced mixed results, partly because the
theory is hard to test (Alderfer, 1972; Latham and Pinder, 2005; Lawler and Shuttle, 1973;
Schneider and Alderfer, 1973; Wahba and Bridwell, 1976). Some research suggests that the
theory is valid across cultures (Ajila, 1997; Rao and Kulkarni, 1998), but the many theories
of motivation developed since Maslow attest that the jury is still out on whether people
have the needs Maslow posited or that the satisfaction of one need leads to activation of
another.
Despite the modest evidence, Maslow’s view has been widely accepted and enormously
influential in managerial practice. Take, for example, the advice that the Manager’s Guide at
Federal Express offers employees: “Modern behavioral scientists such as Abraham
Maslow…have shown that virtually every person has a hierarchy of emotional needs, from
basic safety, shelter, and sustenance to the desire for respect, satisfaction, and a sense of

accomplishment. Slowly these values have appeared as the centerpiece of progressive
company policies, always with remarkable results” (Waterman, 1994, p. 92). Chip Conley,
founder of a California hotel chain, put it simply: “I came to realize my climb to the top
wasn’t going to be on a traditional corporate ladder; instead it was going to be on Maslow’s
Hierarchy of Needs pyramid” (Conley, 2007). Academic skepticism didn’t prevent him,
FedEx, Joie de Vivre hotels, or Airbnb from building a highly successful management
philosophy based on Maslow’s theory, because the ideas carry a powerful message. If
you manage solely by carrot and stick, you’ll get only a part of the energy and talent that
people have to offer.

Theory X and Theory Y
Douglas McGregor (1960) built on Maslow’s theory by adding another important idea: that
managers’ assumptions about people tend to become self-fulfilling prophecies. McGregor
argued that most managers harbor “Theory X” assumptions that subordinates are passive
and lazy, have little ambition, prefer to be led, and resist change. Most conventional
management practices, in his view, had been built on either “hard” or “soft” versions of
Theory X. The hard version emphasizes coercion, tight controls, threats, and punishments.
Over time, it generates low productivity, antagonism, militant unions, and subtle
sabotage—conditions that were turning up in workplaces across the United States at the
time. Soft versions of Theory X try to avoid conflict and keep everyone happy. The usual
result is superficial harmony with undercurrents of apathy, indifference, and smoldering
resentment.

McGregor’s key point was that a hard or soft Theory X approach is self-fulfilling: If you treat
people as if they’re lazy and need to be directed, they live down to your expectations.
Managers who say they know from experience that Theory X is the only way to get
anything done are missing a key insight: The fact that people respond to you in a certain
way may say more about you than about them. McGregor advocated a different way to
think about people that he called Theory Y. Maslow’s hierarchy of needs was the
foundation:
The man whose needs for safety, association, independence, or status are thwarted is sick
as surely as the man who has rickets. And his sickness will have behavioral consequences.
We will be mistaken if we attribute his resultant passivity, hostility, and refusal to accept
responsibility to his inherent human nature. These forms of behavior are symptoms of
illness—of deprivation of his social and egoistic needs (McGregor, 1960, pp. 35–36).
Theory Y’s key proposition is that “the essential task of management is to arrange
conditions so that people can achieve their own goals best by directing efforts toward
organizational rewards” (McGregor, 1960, p. 61). If individuals find no satisfaction in their
work, management has little choice but to rely on Theory X and external control.
Conversely, the more managers align organizational requirements with employee self-
interest, the more they can rely on Theory Y’s principle of self-direction.

Personality and Organization
Like his contemporary McGregor, Chris Argyris (1957, 1964) saw a basic conflict between
human personality and prevailing management practice. Argyris argued that people have

basic “self-actualization trends”—akin to the efforts of a plant to reach its biological
potential. From infancy into adulthood, people advance from dependence to independence,
from a narrow to a broader range of skills and interests. They move from a short time
perspective (interests quickly developed and forgotten, with little ability to anticipate the
future) to a much longer-term horizon. The child’s impulsivity and limited self-knowledge
are replaced by a more mature level of self-awareness and self-control.
Like McGregor, Argyris believed that organizations often treated workers like children
rather than adults—a view eloquently expressed in Charlie Chaplin’s 1936 film Modern
Times. In a classic scene, Chaplin’s character works furiously on an assembly line, trying to
tighten bolts on every piece that slides past. Skill requirements are minimal, and he has no
control over the pace of his work. An efficiency expert uses Chaplin as the guinea pig for a
new machine designed to feed him lunch while he continues to tighten bolts. It goes
haywire and begins to assault Chaplin with food—pouring soup on his lap and shoving
bolts into his mouth. The film’s message is clear: Industrial organizations abuse workers
and treat them like infants.

Argyris and McGregor saw person-structure conflict built into traditional principles of
organizational design and management. The structural concept of task specialization
defines jobs as narrowly as possible to improve efficiency. But the rational logic often
backfires. Consider the experience of autoworker Ben Hamper. His observations mirror a
story many other U.S. workers could tell:
I was seven years old the first time I ever set foot inside an automobile factory. The
occasion was Family Night at the old Fisher Body plant in Flint where my father worked the
second shift. If nothing else, this annual peepshow lent a whole world of credence to our
father’s daily grumble. The assembly line did indeed stink. The noise was very close to
intolerable. The heat was one complete bastard.
After a hundred wrong turns and dead ends, we found my old man down on the trim line.
His job was to install windshields using this goofy apparatus with large suction cups that
resembled an octopus being crucified. A car would nuzzle up to the old man’s work area
and he would be waiting for it, a cigarette dangling from his lip, his arms wrapped around
the windshield contraption as if it might suddenly rebel and bolt off for the ocean. Car,
windshield. Car, windshield. Car, windshield. No wonder my father preferred playin’
hopscotch with barmaids (Hamper, 1992, pp. 1–2).
Following in his father’s and grandfather’s footsteps, Ben Hamper became an
autoworker—the pay was good, and he didn’t know anything else. He soon discovered a
familiar pattern. His career began decades after Argyris and McGregor questioned the
fallacies of traditional management, but little had changed. Hamper held down a variety of
jobs, each as mindless as the next: “The one thing that was impossible to escape was the
monotony. Every minute, every hour, every truck, and every movement was a plodding
replica of the one that had gone before” (1992, p. 41).

The specialization Ben Hamper experienced in the auto plant calls for a clear chain of
command to coordinate discrete jobs. Bosses direct and control subordinates, thus
encouraging passivity and dependence. The conflict worsens at lower levels of the
hierarchy—narrower, more mechanized jobs, more directives, and tighter controls. As

people mature, conflict intensifies. Leann Bies was 44 with a bachelor’s degree in business
when she started work as a licensed electrician at a Ford truck plant in 2003, and “for two
years they treated me as if I were dumber than a box of rocks. You get an attitude if you are
treated that way” (Uchitelle, 2007, p. 10).
Argyris argued that employees try to stay sane by looking for ways to escape these
frustrations. He identified six options:

1. They withdraw—through chronic absenteeism or simply by quitting. Ben Hamper
chronicled many examples of absenteeism and quitting, including a friend who
lasted only a couple of months:

My pal Roy was beginning to unravel in a real rush. His enthusiasm about all the
money we were makin’ had dissipated and he was having major difficulty coping
with the drudgery of factory labor. His job, like mine, wasn’t difficult. It was just
plain monotonous…

The day before he quit, he approached me with a box-cutter knife sticking out of his
glove and requested that I give him a slice across the back of the hand. He felt sure
this ploy would land him a few days off. Since slicing Roy didn’t seem like a solid
career move, I refused. Roy went down the line to the other workers where he
received a couple of charitable offers to cut his throat, but no dice on the hand. He
wound up sulking back to his job. After that night, I never saw Roy again (1992, pp.
40, 43).

CHAPTER 7
IMPROVING HUMAN RESOURCE MANAGEMENT
Far and away the best prize that life offers is the chance to work hard at work worth doing.

—Theodore Roosevelt
Google, with more than 500 applicants for every job opening in recent years, is harder to
get into than Harvard. In 2017 it was once again number one on Fortune’s list of the best
places to work (Fortune, 2017). Its king-of-the-Internet image helps, but the search giant
knows it takes more to hire and retain the brainy, high-energy geeks who keep the place
going and growing. As one Googler put it, “The company culture truly makes workers feel
they’re valued and respected as a human being, not as a cog in a machine. The perks are

phenomenal. From three prepared organic meals a day to unlimited snacks, artisan coffee
and tea to free personal-fitness classes, health clinics, on-site oil changes, haircuts, spa
truck, bike-repair truck, nap pods, free on-site laundry rooms, and subsidized wash and
fold. The list is endless” (Fortune, 2016).
Few go as far as Google, but a growing number of enlightened companies are finding their
own ways to attract and develop human capital. They see talent and motivation as business
essentials. That idea has taken a couple of centuries to gain traction, and many companies
still don’t get it. They adhere to the old view that anything you give to employees siphons
money from the bottom line—like having your pocket picked or your bank account
drained.

A pioneer of a more progressive approach was a Welshman, Robert Owen, who ran into
fierce opposition. Born in 1771, Owen became a wildly successful entrepreneur before the
age of 30 by exploiting the day’s hot technology—textile mills. Owen was heavily attacked
because he was the only capitalist of his time who believed it was bad for business to work
eight-year-olds in 13-hour factory shifts. At his New Lanark (Scotland) knitting mill, bought
in 1799, Owen took a new approach:

Owen provided clean, decent housing for his workers and their families in a community
free of contagious disease, crime, and gin shops. He took young children out of the factory
and enrolled them in a school he founded. There he provided preschool, day care, and a
brand of progressive education that stresses learning as a pleasurable experience (along
with the first adult night school). The entire business world was shocked when he
prohibited corporal punishment in his factory and dumbfounded when he retrained his
supervisors in humane disciplinary practices. While offering his workers an extremely high
standard of living compared to other workers of the era, Owen was making a fortune at
New Lanark. This conundrum drew twenty thousand visitors between 1815 and 1820
(O’Toole, 1995, pp. 201, 206).

Owen tried to convince fellow capitalists that investing in people could produce a greater
return than investments in machinery. But the business world dismissed him as a wild
radical whose ideas would harm the people he wanted to help (O’Toole, 1995).

Owen was at least 100 years ahead of his time. A century later, when Henry Ford
announced in 1914 that he was going to shorten the workday to 8 hours and double the
wages of his blue-collar workers from $2.50 to $5.00 per day, he also came under heavy fire
from the business community. The Wall Street Journal opined that he was “committing
economic blunders, if not crimes” (Harnish et al., 2012). The Journal got it wrong. Ford’s
profits doubled over the next two years as productivity soared and employee turnover
plunged. Ford later said the five dollars per day was the best cost-cutting move he ever
made.
Only in the late twentieth century did more business leaders begin to believe that investing
in people is a way to make money. In recent years, periodic waves of restructuring and
downsizing have raised age-old questions about the relationship between the
individual and the organization. A number of persuasive reports suggest Owen was right:
An excellent route to long-term success is investing in employees and responding to their
needs (Applebaum et al., 2000; Barrick et al., 2015; Collins and Porras, 1994; Deal and
Jenkins, 1994; Farkas and De Backer, 1996; Becker and Huselid, 1998; Lawler, 1996;

Levering and Moskowitz, 1993; Pfeffer, 1994, 1998, 2007; Schwartz and Porath, 2014;
Waterman, 1994).

Changes in the business environment have made human resource management more
critical than ever. “A skilled and motivated work force providing the speed and flexibility
required by new market imperatives has increased the importance of human resource
management issues at a time when traditional sources of competitive advantage (quality,
technology, economies of scale, etc.) have become easier to imitate” (Becker and Huselid,
1998, p. 54). Yet many organizations still don’t believe it, and others only flirt with the idea:

Something very strange is occurring in organizational management. Over the past decade
or so, numerous rigorous studies conducted both within specific industries and in samples
across industries have demonstrated the enormous economic returns obtained through the
execution of what are variously labeled as high involvement, high performance, or high
commitment management practices… But even as positive results pile up, trends in actual
management practice are often moving exactly opposite to what the evidence advocates
(Pfeffer, 1998, p. xv).
Why would managers resist better ways of managing people? One reason is that Theory X
managers fear losing control or indulging workers. A second is that investing in people
requires time and persistence to yield a payoff. Faced with relentless pressure for
immediate results, executives often conclude that slashing costs, changing strategy, or
reorganizing is more likely to produce a quick hit. A third factor is the dominance of a
“financial” perspective that sees the organization as simply a portfolio of financial assets
(Pfeffer, 1998). In this view, human resources are subjective, soft, and suspect in
comparison to hard financial numbers.

Getting it Right
Despite such barriers, many organizations get it right. They understand the need to develop
an approach to people that flows from the organization’s strategy and human capital needs
(Barrick et al., 2015; Becker and Huselid, 1998). Their practices are not perfect but
good enough. The organization benefits from a talented, motivated, loyal, and free-spirited
workforce. Employees in turn are more productive, innovative, and willing to go out of
their way to get the job done. They are less likely to make costly blunders or to jump ship
when someone offers them a better deal. That’s a potent edge—in sports, business, or
elsewhere. Every organization with productive people management has its own distinct
approach, but most include variations on strategies summarized in Exhibit 7.1 and
examined in depth in the remainder of the chapter.
Exhibit 7.1. Basic Human Resource Strategies.
Human Resource Principle Specific Practices
Build and implement an HR
strategy.

Develop and share a clear philosophy for managing
people.
Build systems and practices to implement the philosophy.

Hire the right people. Know what you want.
Be selective.

Human Resource Principle Specific Practices
Keep them. Reward well.

Protect jobs.
Promote from within.
Share the wealth.

Invest in them. Invest in learning.
Create development opportunities.

Empower them. Provide information and support.
Encourage autonomy and participation.
Redesign work.
Foster self-managing teams.
Promote egalitarianism.

Promote diversity. Be explicit and consistent about the organization’s
diversity philosophy.
Hold managers accountable.

Develop and Implement an HR Philosophy
“Systematic and interrelated human resource management practices” provide a sustainable
competitive advantage. The key is a philosophy or credo that makes explicit an
organization’s core beliefs about managing people (Becker and Huselid, 1998, p. 55). The
credo then has to be translated into specific management practices. Most organizations lack
a philosophy, or they ignore the one they claim to have. A philosophy provides direction;
practices make it real.

Wegmans, a supermarket chain in the northeastern United States that consistently gets top
marks for both customer satisfaction and employee well-being, has been on Fortune’s list
of the 100 Best Companies to Work every year since 1998. It offers a succinct statement of
“What We Believe:”
At Wegmans, we believe that good people, working toward a common goal, can accomplish
anything they set out to do.
In this spirit, we set our goal to be the very best at serving the needs of our customers.
Every action we take should be made with this in mind.

We also believe that we can achieve our goal only if we fulfill the needs of our own people
(Wegmans, 2016).

Hire the Right People
Strong companies know the kinds of people they want and hire those who fit the mold.
Southwest Airlines became the most successful carrier in the U.S. airline industry by hiring
people with positive attitudes and well-honed interpersonal skills, including a sense of
humor (Farkas and De Backer, 1996; Labich, 1994; Levering and Moskowitz, 1993). In one
case, interviewers asked a group of pilots applying for jobs at Southwest to change into
Bermuda shorts for the interviews. Two declined. They weren’t hired (Freiberg and
Freiberg, 1998).

Even though Hertz had a 40-year head start, Enterprise overtook them in the 1990s to
become the biggest firm in the car rental business. Enterprise wooed its midmarket
clientele by deliberately hiring “from the half of the class that makes the top half
possible”—college graduates more successful in sports and socializing than the classroom.
Recruiting for people skills more than “book smarts” helped Enterprise build exceptional
levels of customer service (Pfeffer, 1998, p. 71). In contrast, Microsoft’s formidably bright
CEO, Bill Gates, insisted on “intelligence or smartness over anything else, even, in many
cases, experience” (Stross, 1996, p. 162). Google wants smarts, too, but believes teamwork
is equally important—one reason that its hiring is team-based (Schmidt and Varian, 2005).
The principle seems to apply globally, as illustrated by a study of successful midsized
companies in Germany (Simon, 1996). Turnover was rare in these firms except among new
hires: “Many new employees leave, or are terminated, shortly after joining the work
force, both sides having learned that a worker does not fit into the firm’s culture and
cannot stand its pace” (p. 199). Zappos tries to accelerate the process by offering new hires
a cash bonus to quit after they complete the company’s orientation program. Few take the
money and run, but Zappos wants to keep only people who love the company’s
idiosyncratic culture.

Keep Employees
To get people they want, companies like Google, Southwest Airlines, and Wegmans offer
attractive pay and benefits. To keep them, they protect jobs, promote from within, and give
people a piece of the action. They recognize the high cost of turnover—which for some jobs
and industries can run well over 100 percent a year. Beyond the cost of hiring and training
replacements, turnover hurts performance because newcomers’ lack of experience, skills,
and local knowledge increases errors and reduces efficiency (Kacmar et al., 2006). This is
true even at the CEO level. CEOs who move from one organization to another perform less
well on average than those who are hired from inside (Elson and Ferrere, 2012).
Reward Well
In a cavernous, no-frills retail warehouse setting, where bulk sales determine stockholder
profits, knowledgeable, dependable service usually isn’t part of the low-cost package. Don’t
try to tell that to Costco Wholesale Corp., where employee longevity and high morale are as
commonplace as overloaded shopping carts. “We like to turn over our inventory faster than
our people,” says Jim Sinegal, Costco founder and CEO until he retired in 2012. Costco, a
membership warehouse store headquartered in Washington State, by 2016 had become
the world’s second largest retailer (after Walmart) with more than 700 stores across the
United States and beyond.
Costco has a counterintuitive success formula: Pay employees more and charge customers
less than its biggest competitor, Sam’s Club (a Walmart subsidiary). A great way to lose
money? Costco has been the industry’s most profitable firm in recent years. How? In
Sinegal’s view, the answer is easy: “If you pay the best wages, you get the highest
productivity. By our industry standards, we think we’ve got the best people and the best
productivity when we do that.” Costco paid its employees about 70 percent more than
Sam’s Club but generated twice as much profit per worker (Cascio, 2006). Compared with
competitors, Costco achieved higher sales volumes, faster inventory turnover, lower

shrinkage, and higher customer satisfaction (RetailSails 2012; American Customer
Satisfaction Index, 2016). Costco illustrates a general principle: Pay should reflect value
added. Paying people more than they contribute is a losing proposition. But the reverse is
also true: It makes sense to pay top dollar for exemplary contributions of skilled,
motivated, and involved employees (Lawler, 1996).

“This is the lesson Costco teaches,” says retailing guru Doug Stephens. “You don’t have to be
Nordstrom selling $1,200 suits in order to pay people a living wage. That is what Walmart
has lost sight of. A lot of people working at Walmart go home and live below the poverty
line. You expect that person to come in and develop a rapport with customers who may be
spending more than that person is making in a week? You expect them to be civil and
happy about that?” (Stone, 2013).
To get and keep good people, selective organizations also offer attractive benefits. Firms
with “high-commitment” human resource practices are more likely to offer work and
family benefits, such as daycare and flexible hours (Osterman, 1995). Take software
powerhouse SAS:
Just about every benefit known to corporate America—on-site child care, swimming pools,
medical clinics, fitness centers, car detailings, nail salons, shoe repairs—are on offer at this
software company based in Research Triangle Park, North Carolina. Said one employee: “I
get massages, pick up prescriptions, get my hair done, take photography classes, get
physical therapy. The list is endless.” But the employee quickly added: “It’s not just about
the ‘what.’ It’s about the place itself. The campus is beautiful and quite tranquil. I can take a
walk during lunch and find myself far away. I know it sounds corny, but I enjoy just driving
into campus in the morning” (Fortune: SAS Institute, 2016).

Why spend that much? In an industry where turnover rates hover around 20 percent, SAS
maintains a level below 4 percent, which results in about $50 million a year in HR-related
savings, according to a Harvard Business School study. “The well-being of our company is
linked to the well-being of our employees,” says SAS CEO Jim Goodnight (Stein, 2000, p.
133).

Protect Jobs
Job security might seem anachronistic today, a relic of more leisurely, paternalistic times.
In a turbulent, highly competitive world, is long-term commitment to employees possible?
Yes, but it’s not easy. Companies (and even countries) historically offering long-term
security have abandoned their commitment in the face of severe economic pressures.
During the first year of the recession of 2008–2009, American businesses laid off close to
2.5 million workers (Bureau of Labor Statistics, 2012). In China, a government report
counted more than 25 million layoffs from 1998 to 2001, many of them unskilled older
workers (“China Says ‘No’ …,” 2002; Lingle, 2002; Smith, 2002). Many state-owned
enterprises foundered when economic reforms forced them to sink or swim in a
competitive market.

Yet many firms continue to honor job security as a cornerstone of their human resource
philosophy. Publix, an employee-owned, Fortune 500 supermarket chain in the
southeastern United States, has never had a layoff since its founding in 1930. Similarly,

Lincoln Electric, the world’s largest manufacturer of arc welding equipment, has honored
since 1914 a policy that no employee with more than three years of service will be laid off.
This commitment was tested when the company experienced a 40-percent year-to-year
drop in demand for its products. To avoid layoffs, production workers became salespeople.
They canvassed businesses rarely reached by the company’s regular distribution channels.
“Not only did these people sell arc welding equipment in new places to new users, but since
much of the profit of this equipment comes from the sale of replacement parts, Lincoln
subsequently enjoyed greater market penetration and greater sales as a consequence”
(Pfeffer, 1994, p. 47).
Japan’s Mazda, facing similar circumstances, had a parallel experience: “At the end of the
year, when awards were presented to the best salespeople, the company discovered that
the top 10 were all former factory workers. They could explain the product effectively, and
when business picked up, the fact that factory workers had experience talking to customers
yielded useful ideas about product characteristics” (Pfeffer, 1994, p. 47).
Promote from Within
Costco promotes more than 80 percent of its managers from inside the company, and 90
percent of managers at FedEx started in a nonmanagerial job. Promoting from within offers
several advantages (Pfeffer, 1998):

• It encourages both management and employees to invest time and resources in
upgrading skills.

• It is a powerful performance incentive.
• It fosters trust and loyalty.

• It capitalizes on knowledge and skills of veteran employees.

• It avoids errors by newcomers unfamiliar with the company’s history and proven
ways.

• It increases the likelihood that employees will think for the longer term and avoid
impetuous, shortsighted decisions. Highly successful corporations rarely hire a chief
executive from the outside; less effective companies do so regularly (Collins and
Porras, 1994).

Share the Wealth
Employees often feel little responsibility for an organization’s performance because they
expect gains in efficiency and profitability to benefit only executives and shareholders.
People-oriented organizations have devised a variety of ways to align employee rewards
more directly with business success. These include gain-sharing, profit-sharing, and
employee stock ownership plans (ESOPs). Scanlon plans, first introduced in the 1930s, give
workers an incentive to reduce costs and improve efficiency by offering them a share of
gains. Profit-sharing plans at companies like Nucor give employees a bonus tied to overall
profitability or to the performance of their local unit.
Both gain-sharing and profit-sharing plans usually have a positive impact on performance
and profitability, although some have worked better than others. Success depends on how

well these plans are integrated into a coherent human resource philosophy. Kanter (1989a)
suggests that gain-sharing plans have spread slowly because they require broader changes
in managing people: cross-unit teams, suggestion systems, and more open communication
of financial information (Kanter, 1989a). Similar barriers have slowed the progress of
ESOPs:

To be effective, ownership has to be combined with ground-floor efforts to involve
employees in decisions through schemes such as work teams and quality-improvement
groups. Many companies have been doing this, of course, including plenty without ESOPs.
But employee-owners often begin to expect rights that other groups of shareholders have:
a voice in broad corporate decisions, board seats, and voting rights. And that’s where the
trouble can start, since few executives are comfortable with this level of power-sharing
(Bernstein, 1996, p. 101).
Nevertheless, there have been many successful ESOPs. Thousands of firms participate
(Rosen, Case, and Staubus, 2005), and most of the plans have been successful (Blasi, Kruse,
and Bernstein, 2003; Blair, Kruse, and Blasi, 2000; Kruse, Blasi, and Park, 2010). Employee
ownership tends to be a durable arrangement and to make the company more stable—less
likely to fail, be sold, or to lay off employees (Blair, Kruse, and Blasi, 2000). When first
introduced, employee ownership tends to produce productivity gains that persist over time
(Kruse, 1993). A plan’s success depends on effective implementation of three elements of
the “equity model” (Rosen et al., 2005, p. 19):

• Employees must have a significant ownership share in the company.

• The organization needs to build an “ownership culture” (p. 34).
• It is important that “employees both learn and drive the business disciplines that

help their company do well” (p. 38).
All those characteristics can be found at Publix, America’s largest employee-owned
business. Publix has become a fixture on Fortune’s list of most admired companies and its
list of best places to work, while achieving the highest customer satisfaction ratings in its
industry (American Customer Satisfaction Index, 2016).

Bonus and profit-sharing plans spread rapidly in the boom years of the 1990s. The benefits
often went mostly to top managers, but many successful firms shared benefits more widely.
Skeptics noted a significant downside risk to profit-sharing plans: They work when there
are rewards but breed disappointment and anger if the company experiences a financial
downturn. A famous example is United Airlines, whose employees took a 15-percent pay
cut in return for 55-percent ownership of the company in 1994. Initially, it was a huge
success. Employees were enthusiastic when the stock soared to almost $100 a share. But,
like most airlines, United experienced a financial crunch after 9/11. Employees were
crushed when bankruptcy left their shares worthless and their pensions underfunded.

Invest in Employees
Undertrained workers harm organizations in many ways: shoddy quality, poor service,
higher costs, and costly mistakes. A high proportion of petrochemical industry accidents
involve contract employees (Pfeffer, 1994), and in postinvasion Iraq some of America’s

more damaging mistakes were the work of private security contractors, who often had less
training and discipline than their military counterparts.
Many organizations are reluctant to invest in developing human capital. The costs of
training are immediate and easy to measure; the benefits are long term and less certain.
Training temporary or contract workers carries added disincentives. Yet many companies
report a sizable return on their training investment. An internal study at Motorola, for
instance, found a gain of $29 for every dollar invested in sales training (Waterman, 1994),
and an analysis of the effects of training programs over the period 1960 to 2000 found
consistently positive effects, “comparable to or larger than other organizational
interventions designed to improve performance” (Pfeffer, 2007, p. 30).

Empower Employees
Progressive organizations give power to employees as well as invest in their development.
Empowerment includes keeping employees informed, but it doesn’t stop there. It also
involves encouraging autonomy and participation, redesigning work, fostering teams,
promoting egalitarianism, and infusing work with meaning.
Provide Information and Support
A key factor in Enron’s dizzying collapse was that few people fully understood its financial
picture. Eight months before the crash, Fortune reporter Bethany McLean asked CEO Jeffrey
Skilling, “How, exactly, does Enron make money?” Her March 2001 article
in Fortune pointed out that the company’s financial reports were almost impenetrable and
the stock price could implode if the company missed its earnings forecasts.
Over the last few decades, a philosophy sometimes called “open-book management” has
begun to take root in progressive companies. The movement was inspired by the near-
death experience of an obscure plant in Missouri, Springfield Remanufacturing (now SRC
Holdings). SRC was created in 1983 when a group of managers and employees purchased it
from International Harvester for about $100,000 in cash and $9 million in debt. It was one
of history’s most highly leveraged buyouts (Pfeffer, 1998; Stack and Burlingham, 1994).
Less debt had strangled many companies, and CEO Jack Stack figured the business could
make it only with everyone’s best efforts. He developed the open-book philosophy as a way
to survive. The system was built around three basic principles (Case, 1995):

• All employees at every level should see and learn to understand financial and
performance measures.

• Employees are encouraged to think like owners, doing whatever they can to
improve the numbers.

• Everyone gets a piece of the action—a stake in the company’s financial success.

Open-book management works for several reasons. First, it sends a clear signal that
management trusts people. Second, it creates a powerful incentive for employees to
contribute. They can see the big picture—how their work affects the bottom line and how
the bottom line affects them. Finally, it furnishes information they need to do a better job. If
efficiency is dropping, scrap is increasing, or a certain product has stopped selling,
employees can pinpoint the problem and correct it.

Open-book strategies have been applied mostly in relatively small companies, but they’ve
also worked for Whole Foods, the natural foods supermarket chain, and Hilcorp, the largest
privately owned U.S. business in the oil and gas industry. Whole Foods “collects and
distributes information to an extent that would be unimaginable almost anywhere else.
Sensitive figures on store sales, team sales, profit margins, even salaries, are available to
every person in every location” (Fishman, 1996a). Hilcorp attained notoriety in December,
2015, when CEO Jeffrey Hildebrand came through on his promise to give every employee $

CHAPTER 8
INTERPERSONAL AND GROUP DYNAMICS
Coming together is a beginning. Keeping together is progress. Working together is success.

—Henry Ford
Anne Barreta
Anne Barreta was excited but scared when she became the first woman and the first
Hispanic American ever promoted to district marketing manager at the Hillcrest
Corporation. She knew she could do the job, but she expected to be under a microscope.
Her boss, Steve Carter, was very supportive. Others were less enthusiastic—like the
coworker who smiled as he patted her on the shoulder and said, “Congratulations! I just
wish I was an affirmative action candidate.”
Anne was responsible for one of two districts in the same city. Her counterpart in the other
district, Harry Reynolds, was 25 years older and had been with Hillcrest 20 years longer.
Some said that the term “good old boy” could have been invented to describe Harry. Usually
genial, he had a temper that flared quickly when someone got in his way. Anne tried to
maintain a positive and professional relationship but often found Harry to be
condescending and arrogant.
Things came to a head one afternoon as Anne, Harry, and their immediate subordinates
were discussing marketing plans. Anne and Harry were disagreeing politely. Mark, one of
Anne’s subordinates, tried to support her views, but Harry kept cutting him off. Anne saw
Mark’s frustration building, but she was still surprised when he angrily told Harry, “If you’d
listen to anyone besides yourself and think a little before you open your mouth, we’d make
a lot more progress.” With barely controlled fury, Harry declared that “this meeting is
adjourned” and stormed out.
A day later, Harry phoned to demand that Anne fire Mark. Anne tried to reason with him,
but Harry was adamant. Worried about the fallout, Anne talked to Steve, their mutual boss.

He agreed that firing Mark was too drastic but suggested a reprimand. Anne agreed and
informed Harry. He again became angry and shouted, “If you want to get along in this
company, you’d better fire that guy!” Anne calmly replied that Mark reported to her.
Harry’s final words were, “You’ll regret this!”
Three months later, Steve called Anne to a private meeting. “I just learned,” he said, “that
someone’s been spreading a rumor that I promoted you because you and I are having an
affair.” Anne was stunned by a jumble of feelings—confusion, rage, surprise, shame. She
groped for words, but none came.

“It’s crazy, I know,” Steve continued. “But the company hired a private detective to check it
out. Of course, they didn’t find anything. So they’re dropping it. But some of the damage is
already done. I can’t prove it, but I’m pretty sure who’s behind it.”

“Harry?” Anne asked.
“Who else?”
Managers spend most of their time relating to other people—in conversations and
meetings, in groups and committees, over coffee or lunch, on the phone, or on the net
(Kanter, 1989b; Kotter, 1982; Mintzberg, 1973; Watson, 2000). The quality of their
relationships figures prominently in how satisfied and how effective they are at work. But
people bring patterns of behavior to the workplace that have roots in early life. These
patterns do not change quickly or easily on the job. Thompson (1967) and others have
argued that the socializing effects of family and society shape people to mesh with the
workplace. Schools, for example, teach students to be punctual, complete assignments
on time, and follow rules. But schools are not always fully successful, and future
employees are shaped initially by family—a decentralized cottage industry that seldom
produces raw materials exactly to corporate specifications.
People can become imperfect cogs in the bureaucratic machinery. They form
relationships to fit individual styles and preferences, often ignoring what the organization
requires. They may work but never only on their official assignments. They also express
personal and social needs that often diverge from formal rules and requirements. A
project falters, for example, because no one likes the manager’s style. A committee
bogs down because of interpersonal tensions that everyone notices but no one
mentions. A school principal spends most days dealing with a handful of abrasive and
vocal teachers who generate far more than their share of discipline problems and parent
complaints. Protracted warfare arises because of personal friction between two
department heads.
This chapter begins by looking at basic sources of effective (or ineffective) interpersonal
relations at work. We examine why individuals are often blind to self-defeating personal
actions. We describe theories of interpersonal competence and emotional intelligence,
explaining how they influence office relationships. We explore different ways of
understanding individual style preferences. Finally, we discuss key human-resource
issues in the functioning of groups and teams: informal roles, norms, conflict, and
leadership.

Greatest Hits from Organization Studies

Hit Number 6: M. S. Granovetter, “Economic Action and Social
Structure: The Problem of Social Embeddedness.” American Journal
of Sociology, 1985, 91(3), 481–510
The central question in Granovetter’s influential article is a very broad one: “How behavior
and institutions are affected by social relations.” Much of his approach is captured in a quip
from James Duesenberry that “economics is all about how people make choices; sociology
is all about how they don’t have any choices to make” (1960, p. 233). Classical economic
perspectives, Granovetter argues, assume that economic actors are atomized individuals
whose decisions are little affected by their relationships with others. “In classical and
neoclassical economics, therefore, the fact that actors may have social relations with one
another has been treated, if at all, as a frictional drag that impedes competitive markets”
(Granovetter, 1985, p. 484). Conversely, Granovetter maintains that sociological models are
often “oversocialized” because they depict “processes in which actors acquire customs,
habits, or norms that are followed mechanically and automatically, irrespective of their
bearing on rational choice” (p. 485). The truth, in Granovetter’s view, lies between these
two extremes: “Actors do not behave or decide as atoms outside a social context, nor do
they adhere slavishly to a script written for them by the particular intersection of social
categories that they happen to occupy. Their attempts at purposive action are instead
embedded in concrete, ongoing systems of social relations” (p. 487). Granovetter’s
argument may sound familiar, since it aligns with a central theme in our book: Actors make
choices, but their choices are inevitably shaped by social context.
To illustrate his argument, Granovetter critiques another influential perspective: Oliver
Williamson’s analysis of why some decisions get made in organizational hierarchies and
others are made in markets (Williamson, 1975, number 12 on our list of scholars’ hits).
Williamson proposed that repetitive decisions involving high uncertainty were more likely
to be made in hierarchies because organizations had advantages of information and
control—people knew and had leverage over one another. Granovetter counters that
Williamson underestimates the power of relationships in cross-firm transaction and
overemphasizes the advantages of hierarchy. A central point in Granovetter’s argument is
that relationships often trump structure: “The empirical evidence that I cite shows … that
even with complex transactions, a high level of order can often be found in the market—
that is, across firm boundaries—and a correspondingly high level of disorder within the
firm. Whether these occur, instead of what Williamson expects, depends on the nature of
personal relations and networks of relations between and within firms” (p. 502).

Interpersonal Dynamics
In organizations, as elsewhere in life, many of the greatest highs and lows stem from
relations with other people. Three recurrent questions about relationships regularly haunt
managers:

• What is really happening in this relationship?
• What motives are behind other peoples’ behavior?

• What can I do about it?

All were key questions for Anne Barreta. What was happening between her and Harry
Reynolds? Did he really start the rumor? If so, why? How should she deal with someone
who seemed so difficult and devious? Should she talk to him? What options did she have?
To some observers, what’s happening might seem obvious: Harry resents a young minority
woman who has become his peer. He becomes even more bitter when she rejects his
demand to fire Mark and then seeks revenge through a sneak attack. The case resembles
many others in which men dominate or victimize women. What should Anne, or any
woman in similar circumstances, do? Confront the larger issues? That might help in the
long run, but a woman who initiates confrontation risks being branded a troublemaker
(Collinson and Collinson, 1989). Should Anne try to sabotage Harry before he gets her? If
she does, will she kindle a mêlée in which everyone loses?
Human resource theorists maintain that constructive personal responses are possible even
in highly politicized situations. Argyris (1962), for example, emphasizes the importance of
“interpersonal competence” as a basic managerial skill. He shows that managers’
effectiveness is often impaired because they overcontrol, ignore feelings, and are blind to
their impact on others.

Argyris and Schön’s Theories for Action
Argyris and Schön (1974, 1996) carry the issue of interpersonal effectiveness a step
further. They argue that individual behavior is controlled by personal theories for action—
assumptions that inform and guide behavior. Argyris and Schön distinguish two kinds of
theory. Espoused theories are accounts individuals provide whenever they try to describe,
explain, or predict their behavior. Theories-in-use guide what people actually do. A theory-
in-use is an implicit program or set of rules that specifies how to behave.
Argyris and Schön discovered significant discrepancies between espoused theories and
theories-in-use, which means that people aren’t doing what they think they are. Managers
typically see themselves as more rational, open, concerned for others, and democratic than
others see them. Such blindness is persistent because people learn little from their
experience. A major block to learning is a self-protective model of interpersonal behavior
that Argyris and Schön refer to as Model I (see Exhibit 8.1).
Exhibit 8.1. Model I Theory-in-Use.

Core Values
(Governing
Variables)

Action Strategies Consequences for
Behavioral World

Consequences for
Learning

Define and
achieve your
goals.

Design and manage the
environment
unilaterally.

You will be seen as
defensive, inconsistent,
fearful, selfish.

Self-sealing (so you
won’t know about
negative
consequences of your
actions).

Maximize
winning,
minimize losing.

Own and control
whatever is relevant to
your interests.

You create
defensiveness in
interpersonal
relationships.

Single-loop learning
(you don’t question
your core values and
assumptions).

Core Values
(Governing
Variables)
Action Strategies Consequences for
Behavioral World
Consequences for
Learning

Minimize
generating or
expressing
negative
feelings.

Unilaterally protect
yourself (from
criticism, discomfort,
vulnerability, and so
on).

You reinforce defensive
norms (mistrust, risk
avoidance, conformity,
rivalry, and so on).

You test your
assumptions and
beliefs privately, not
publicly.

Be rational. Unilaterally protect
others from being upset
or hurt (censor bad
news, hold private
meetings, and so on).

Key issues become
undiscussable.

Unconscious collusion
to protect yourself
and others from
learning.

Source: Adapted from Argyris and Schön (1996), p. 93.

Model I
Lurking in Model I is the core assumption that an organization is a dangerous place where
you have to look out for yourself or someone else may do you in. This assumption leads
individuals to follow a predictable set of steps in their attempts to influence others. We can
see the progression in the exchanges between Harry and Anne:

1. Assume that the problem is caused by the other side. Harry seems to think that Mark
and Anne cause his problems; Mark is insulting, and Anne protects him. Anne, for
her part, blames Harry for being biased, unreasonable, and devious. Both are
employing a basic assumption at the core of Model I: “I’m okay, you’re not.” So long
as problems are someone else’s fault, the other, not you, needs to change.

2. Develop a private, unilateral diagnosis and solution. Harry defines the problem and
tells Anne how to solve it: fire Mark. When she declines, he apparently develops
another, sneakier strategy: covertly undermine Anne.

3. Since the other person is the cause of the problem, get that person to change. Use one
or more of three basic strategies: (1) facts, logic, and rational persuasion (tell others
why you’re right); (2) indirect influence (ease in, ask leading questions, manipulate
the other person); or (3) direct critique (tell the other person directly what they are
doing wrong and how they should change). Harry starts out logically, moves quickly
to direct critique, and, if Steve’s diagnosis is correct, finally resorts to subterfuge and
sabotage.

4. If the other person resists or becomes defensive, that confirms that the other person is
at fault. Anne’s refusal to fire Mark presumably verifies Harry’s perception of her as
an ineffective troublemaker. Harry confirms Anne’s perception that he’s
unreasonable by stubbornly insisting that firing is the only sufficient punishment for
Mark.

5. Respond to resistance through some combination of intensifying pressure and
protecting or rejecting the other person. When Anne resists, Harry intensifies the
pressure. Anne tries to soothe him without firing Mark. Harry apparently concludes
that Anne is impossible to deal with and that the best tactic is sabotage. He may

even believe his rumor is true because, in his mind, it’s the best explanation of why
Anne got promoted.

6. If your efforts are less successful than hoped, it is the other person’s fault. You need
feel no personal responsibility. Harry does not succeed in getting rid of Mark or
Anne. He stains Anne’s reputation but damages his own in the process. Everyone is
hurt. But Harry is unlikely to see the error of his ways. The incident may confirm to
Harry’s colleagues that he is temperamental and devious. Such perceptions will
probably block Harry’s promotion to a more senior position. But Harry may persist
in believing that he is right and Anne is wrong, because no one wants to confront
someone as defensive and cranky as Harry.

The result of Model I assumptions is minimal learning, strained relationships, and
deterioration in decision making. Organizations that rely too much on this model are rarely
happy places to work.
Model II
How else can a situation like Anne’s be handled? Argyris and Schön’s Model II offers basic
guidelines:

1. Emphasize common goals and mutual influence. Even in a situation as difficult as
Anne’s, developing shared goals is possible. Deep down, Anne and Harry both want
to be successful. Neither benefits from mutual destruction. At times, each needs help
and might learn and profit from the other. To emphasize common goals, Anne might
ask Harry, “Do we really want an ongoing no-win battle? Wouldn’t we both be better
off if we worked together to develop a better outcome?”

2. Communicate openly; publicly test assumptions and beliefs. Model II suggests that
Anne talk directly to Harry and test her assumptions. She believes Harry deliberately
started the rumor, but she is not certain. She suspects Harry will lie if she confronts
him, another untested assumption. Anne might say, for example, “Harry, someone
started a rumor about me and Steve. Do you know anything about how that story
might have been started?” The question might seem dangerous or naive, but Model
II suggests that Anne has little to lose and much to gain. Even if she does not get the
truth, she lets Harry know she is aware of his game and is not afraid to call him on it.

3. Combine advocacy with inquiry. Advocacy includes statements that communicate
what an individual actually thinks, knows, wants, or feels. Inquiry seeks to learn
what others think, know, want, or feel. Exhibit 8.2 presents a simple model of the
relationship between advocacy and inquiry.

Exhibit 8.2. Advocacy and Inquiry.
Model II emphasizes integration of advocacy and inquiry. It asks managers to express
openly what they think and feel and to actively seek understanding of others’ thoughts and
feelings. Harry’s demand that Anne fire Mark combines highadvocacy with low inquiry. He
tells her what he wants while showing no interest in her point of view. Such behavior tends
to be seen as assertive at best, dominating or arrogant at worst. Anne’s response is low
in both advocacy and inquiry. In her discomfort, she tries to get out of the meeting without
making concessions. Harry might see her as unresponsive, apathetic, or weak.

Model II counsels Anne to combine advocacy and inquiry in an open dialogue. She can tell
Harry what she thinks and feels while testing her assumptions and trying to learn from
him. This is difficult to learn and practice. Openness carries risks, and it is hard to be
effective when you are ambivalent, uncomfortable, or frightened. It gets easier as you
become more confident that you can handle others’ honest responses. Anne’s ability to
confront Harry depends a lot on her self-confidence and interpersonal skills. Beliefs can be
self-fulfilling. If you tell yourself that it’s too dangerous to be open and that you do not
know how to deal with difficult people, you will probably be right. But tell yourself the
opposite, and you may also be right.
The Perils of Self-Protection
When managers feel vulnerable, they revert to self-defense. They skirt issues or attack
others and escalate games of camouflage and deception (Argyris and Schön, 1978). Feeling
inadequate, they try to hide their inadequacy. To avoid detection, they pile subterfuge on
top of camouflage. This generates even more uncertainty and ambiguity and makes it
difficult or impossible to detect errors. As a result, an organization often persists in
following a course everyone privately thinks is a path to disaster. No one wants to be the
one to speak the truth. Who wants to be the messenger bearing bad news?

The result is often catastrophe, because critical information never reaches decision makers.
You might think it difficult to ignore a major gap between what we’re doing and what we
think we’re doing, but it’s not, because we get so much help from others. You can see this
happening in the following conversation between Susan, a cubicle-dwelling supervisor in
an insurance company, and one of her subordinates, Dale. Dale has been complaining that
he’s underpaid and overqualified for his mail clerk job. As he regularly reminds everyone,
he is a college graduate. Susan has summoned Dale to offer him a new position as an
underwriting trainee.
What Susan is thinking: What Susan and Dale say:
I wonder if his education makes him
feel that society owes him a living
without any relationship to his
abilities or productivity.

Susan: We’re creating a new trainee position and
want to offer it to you. The job will carry a salary
increase, but let me tell you something about the
job first.
Dale: Okay. But the salary increase has to be
substantial so I can improve my standard of living.
I can’t afford a car. I can’t even afford to go out on
a date.
Susan: You’ll start as a trainee working with an
experienced underwriter. It’s important work,
because selecting the right risks is critical to our
results. You’ll deal directly with our agents. How
you handle them affects their willingness to place
their business with us.

How can he be so opinionated when
he doesn’t know anything about
underwriting? How’s he going to come
across to the people he’ll have to work
with? The job requires judgment and
willingness to listen.

Dale: I’m highly educated. I can do anything I set
my mind to. I could do the job of a supervisor right
now. I don’t see how risk selection is that difficult.
Susan: Dale, we believe you’re highly intelligent.
You’ll find you can learn many new skills working
with an experienced underwriter. I’m sure many
of the things you know today came from talented
professors and teachers. Remember, one of the
key elements in this job is your willingness to
work closely with other people and to listen to
their opinions.

That’s the first positive response I’ve
heard.

Dale: I’m looking for something that will move me
ahead. I’d like to move into the new job as soon as
possible.
Susan: Our thought is to move you into this
position immediately. We’ll outline a training
schedule for you. On-the-job and classroom, with
testing at the end of each week.

We owe him a chance, but I doubt he’ll
succeed. He’s got some basic
problems.

Dale: Testing is no problem. I think you’ll find I
score extremely high in anything I do.

Dale is puzzled that no one seems to appreciate his talents. He has no clue that his actions
continually backfire. He tries to impress Susan, but almost everything he says confirms his
shortcomings and makes things worse. His constant self-promotion reinforces his public
persona: opinionated, defensive, and a candidate for failure. But Dale doesn’t know this
because Susan doesn’t tell him. At the moment that Susan is worrying that Dale will offend
colleagues by not listening to them, she tells him, “We think you’re intelligent.” Susan has
good reason to doubt Dale’s ability to listen: He doesn’t seem to hear her very well. If he
can’t listen to his boss, what’s the chance he’ll hear anyone else? But Susan ends the
meeting still planning to move Dale into a new position in which she expects that he’ll fail.
She colludes in the likely disaster by skirting the topic of Dale’s self-defeating behavior. In
protecting herself and Dale from a potentially uncomfortable encounter, Susan helps to
ensure that no one learns anything.
There’s nothing unusual about the encounter between Susan and Dale—similar things
happen every day in workplaces around the world. The Dales of the world dig themselves
into deep holes. The Susans help them to remain oblivious as they dig. Argyris calls it
“skilled incompetence”—using well-practiced skills to produce the opposite of what you
intend. Dale wants Susan to recognize his talents. Instead, he strengthens her belief that
he’s arrogant and naive. Susan would like Dale to recognize his limitations but
unintentionally reassures him that he’s fine as he is.

Salovey and Mayer’s Emotional Intelligence
The capacity that Argyris (1962) labeled interpersonal competence harked back to
Thorndike’s definition of social intelligence as “the ability to understand and manage men
and women, boys and girls—to act wisely in human relations” (1920, p. 228). Salovey and
Mayer (1990) updated Thorndike by coining the term emotional intelligence as a label for
skills that include awareness of self and others and the ability to handle emotions and
relationships. Salovey and Mayer discovered that individuals who scored relatively high in
the ability to perceive accurately, understand, and appraise others’ emotions could respond
more flexibly to changes in their social environments and were better able to build
supportive social networks (Cherniss, 2000; Salovey et al., 1999). In the early 1990s, Daniel
Goleman popularized Salovey and Mayer’s work in his best-selling book Emotional
Intelligence.
Interpersonal skills and emotional intelligence are vital, because personal relationships are
a central element of daily life. Many improvement efforts fail not because managers’
intentions are incorrect or insincere but because they are unable to handle the social
challenges of change. Take the case of a manufacturing organization that
proudly announced its “Put Quality First” program. A young manager was assigned to chair
a quality team where she worked. Excited about an opportunity to demonstrate leadership,
she and her team began eagerly. But her plant manager dropped in and out of team
meetings, staying long enough to dismiss any new ideas as impractical or unworkable. The
team’s enthusiasm quickly faded. The plant manager hoped to demonstrate accessibility
and “management by walking around.” No one had the courage to tell him he was killing
the initiative.
Management Best Sellers
Daniel Goleman, Emotional Intelligence (New York: Bantam, 1995)

Daniel Goleman didn’t invent the idea of emotional intelligence but he made it famous. His
best-selling Emotional Intelligence focused more on children and education than on work,
but it was still a hit with the business community. It was followed by articles in the Harvard
Business Review and a small industry producing books, exercises, and training programs
aimed at helping people improve their emotional intelligence (EI). Goleman’s basic
argument is that EI, rather than intellectual abilities (or intelligence quotient, IQ), accounts
for most of the variance in effectiveness among managers, particularly at the senior level.
In a sequel, Primal Leadership, Goleman, Boyatzis, and McKee (2002) define four
dimensions of emotional intelligence. Two are internal (self-awareness and self-
management), and two are external (social awareness and relationship management). Self-
awareness includes awareness of one’s feelings and one’s impact on others. Self-
management includes a number of positive psychological characteristics, among them
emotional self-control, authenticity, adaptability, drive for achievement, initiative, and
optimism. Social awareness includes empathy (attunement to the thoughts and feelings of
others), organizational awareness (sensitivity to the importance of relationships and
networks), and commitment to service. The fourth characteristic, relationship
management, includes inspiration, influence, developing others, catalyzing change,
managing conflict, and teamwork.
Critics have two main complaints about Goleman’s work: They say there’s nothing new, just
an updating of old ideas and common sense, and they maintain that Goleman is better at
explaining why EI is important than at suggesting practical ideas for enhancing it. It is true
that Goleman borrowed the EI label from Salovey and Mayer, and the idea of multiple forms
of intelligence was developed earlier by Howard Gardner (1993) at Harvard and Robert J.
Sternberg (1985) at Yale. The dimensions of EI in Primal Leadership (inspiration,
teamwork, and so forth) could have been culled from the leadership literature of recent
decades. But even if Goleman is offering old wine in new bottles, his work has found a large
and receptive audience because of the way he has packaged and framed the issue. He has
offered a way to think about the relative importance of intellectual and social skills, arguing
that managers with high IQ but low EI are a danger to themselves and others. A growing
body of research supports this proposition (Druskat, Sala and Mount, 2005).

CHAPTER 17
REFRAMING LEADERSHIP
A leader is a dealer in hope.

—Napoléon Bonaparte
The pitched battle between Hillary Clinton and Donald Trump for the U.S. presidency in
2016 sent shockwaves around the world and was unprecedented in many ways. Clinton
was the first woman nominated to run for president by a major party, while Trump was
the first major candidate who had no previous political or military experience. Few, if
any, could remember an election where both candidates were so widely disliked, nor
one where one of the candidates, Trump, spent so much time battling leaders of his
own party. Historians will no doubt spend years trying to sort this out, but a look through

the four frames reveals important lessons for leadership. Structure, people, politics, and
symbols all contributed to the outcome.

Structure
Two key structural issues were the process for nominating candidates and the Electoral
College system for choosing the winner. In U.S. presidential elections, a party’s nominee
emerges over several months from a state-by-state process of caucuses and primary
elections that select delegates to each party’s national convention. The two major parties
had different rules. On the Republican side, it was winner-take-all in many states, and a
candidate could garner all of a state’s delegates with less than half the votes. Running in
a multicandidate field, Trump racked up a majority of all Republican delegates with less
than 40 percent of the total votes. The race ended early but produced an unconventional
candidate opposed by many grassroots Republicans and much of the party’s leadership.
Meanwhile, the Democratic race dragged on longer because the party awarded delegates
on a proportional basis. Over the primary season, Clinton got a majority of the votes but
had trouble pulling away from her major opponent, Bernie Sanders. Even when she won a
state, she often got only a slightly larger share of the delegates.
The Electoral College, a quaint eighteenth century compromise enshrined in the U.S.
Constitution,1 gives each state a number of electors equivalent to its representation in
Congress. Beginning in the 1990s, America became sharply divided between red
(Republican) and blue (Democratic) states. In the 2016 election, most of the 50 states and
the District of Columbia were sure to vote either red or blue, leaving only a few states that
were real battlegrounds and three that were critical. Trump was almost sure to win if, but
only if, he carried Florida, Ohio, and Pennsylvania.

Human Needs
Turning to the human resource frame, we can ask about the concerns and attitudes that
were motivating American voters. It was a year of surprises as both sides of the political
spectrum saw major shifts in the electorate toward greater anger and dissatisfaction with
the status quo. Many voters wanted wholesale change because they believed Washington
was broken. On the Democratic side, almost everyone expected that Clinton, who had
narrowly lost the nomination to Barack Obama eight years earlier, had an easy path to the
nomination. But Bernie Sanders, a relatively obscure senator from Vermont, mounted a
ferocious challenge from the left on a platform of economic justice, universal health care,
and free college tuition. Liberals and young voters flocked to him. Caught off guard, Clinton
struggled to adjust her positions to catch up with a leftward drift among Democratic
primary voters. She ultimately prevailed but emerged weaker than expected amid concerns
that many Sanders voters might never support her.
Meanwhile, the surprises were even greater on the Republican side. When Donald Trump
first announced that he was running for the nomination, almost everyone saw it as a
publicity stunt that would quickly flame out. How could a brash real estate developer and
television personality with no government experience and a crazy idea about building a
wall along the U.S./Mexican border get anything more than a fringe vote? But Trump
tapped into a huge reservoir of disenchantment among voters who felt that they were
being left behind and that the America they knew was being undermined by globalization,

immigrants, bureaucrats, and condescending coastal elites. Trump gave voice to their
feelings. His promise to deport immigrants, bring jobs back, and make America great again
resonated powerfully, and he overwhelmed the large field of more traditional Republicans
running against him.

The human resource frame also underscores the importance of the personal characteristics
of the two candidates. Clinton and Trump had a few things in common. Long before the
election, both were household names and both had very high unfavorable ratings. The two
were also the oldest pair of candidates in U.S. history; Trump would be 70 on Election Day,
and Clinton would be 69. But they had very different personas. Trump was hot where
Clinton was cool, flamboyant where she was restrained, shoot-from-the-hip where she was
disciplined, and outrageous where she was cautious. To almost every issue, Trump offered
dramatic but vague promises, while Clinton delineated specific policies and plans. Voters
who liked one rarely liked the other. Many disliked both and lamented that they were
forced to choose the lesser of two evils.
The candidates also had contrasting leadership styles. Trump was an entertainer, a
business magnate, and perhaps the least-disciplined presidential candidate in American
history. He was notorious for over-the-top 3 AM Twitter storms attacking his various
enemies. He was a relentless warrior who mostly embodied the political and symbolic
frames, both central to effective leadership. Clinton was a cool-headed policy wonk—
strong on details but weaker on assembling them into a compelling vision. She was more
attuned to the structural and human resource frames. Her picture of the future was clearer
on the details but fuzzier in terms of the big picture. Voters knew that Trump promised to
“Make America great again,” but were less clear about Clinton’s core message.

Changing Coalitions
The political frame points to the importance of coalitions and scarce resources, and the
2016 election occurred in the context of a deeply polarized nation and a changing
electorate. Beginning in the 1960s, the Republicans had evolved from the party of the
industrial north to a coalition of economic conservatives (including much of the business
elite) and white social conservatives (particularly in the south and the Plains states). The
party appealed to the first group with support for low taxes, free markets, and free trade
and kept the second group happy by opposing abortion, gay marriage, and government
programs many whites saw as mostly benefitting persons of color.
The Democratic coalition, meanwhile, underwent its own evolution in the late twentieth
and early twenty-first centuries. Members of the white working class, particularly religious
and social conservatives, drifted toward the Republicans, but a new Democratic coalition
emerged that brought together groups heavily concentrated in and around major cities—
the poor, minorities, and upscale progressives.
The differences between Clinton and Trump backers in the 2016 campaign reflected the
evolution in both parties. Democrats increased their share of college-educated voters, and
Clinton won among women and people of color. But Trump won among whites, particularly
white men without college degrees. Tellingly, 81 percent of Trump supporters, but only 19
percent of Clinton’s said that life for people like them was worse now than 50 years earlier
(Smith, 2016).

Culture and Narrative
The symbolic frame underscores the importance of culture and narrative in understanding
the election. A critical cultural shift in the U.S. electorate was the gradual decline of non-
Hispanic whites as a percentage of the population. People of color had become a majority in
four states (California, Hawaii, New Mexico, and Texas) and were gaining in many others.
This worked both for and against Trump: demographics were shifting toward the
Democrats, but that shift triggered powerful levels of distress and anger among many
whites. The specter of terrorism, beginning with 9/11 and continuing with the rise of ISIS,
exacerbated voters’ suspicions toward immigrants in general and Muslims in particular.
Trump supporters were not poorer than Clinton voters, but they had the lowest opinions of
Muslims and were most likely to favor mass deportation of undocumented immigrants
(Matthews, 2016).

What followed was one of the bitterest, most divisive presidential campaigns in U.S.
history. Many Trump supporters saw Clinton as a corrupt, lying criminal who would
confiscate their guns, open the door to terrorists, and destroy everything good in America if
she became president. They cheered when Trump said that she would be in jail if he
became president and nodded assent when he told them that “this election is our last
chance to save our country.” Many Clinton supporters found the prospect of a Trump
presidency genuinely terrifying. They saw him as a homegrown version of Adolf Hitler—an
authoritarian, narcissistic, racist misogynist.

In the end, Clinton got some 2.8 million more votes, but Trump won the presidency. He
took the battleground states he had to get (Florida, Ohio, and Pennsylvania) and picked up
narrow victories in two blue states in the upper Midwest, Michigan, and Wisconsin.

Leadership Lessons from the 2016 Election
In the tale of the 2016 election we can find many of the lessons for leadership that form the
backbone of this chapter. Structure matters but is not always sufficient for leadership
success. Clinton won on campaign infrastructure, but that was not enough to win the
presidency. During the primaries, both candidates had to appeal to the partisan zealots
who form the party’s base, but Trump defied the conventional wisdom that a candidate
needs to move to the center in a general election to pick up independents and undecideds.
He thrived on huge rallies where his passionate supporters devoured his message and
showered him with approval. That passion turned out to be critical.

Symbolically, elections are always about shaping the narrative in order to control how
voters perceive you and your opponent. Trump framed himself as the only leader strong
enough to save America from terminal decline. In his story, the United States had become a
weak, borderless nation that was failing on almost every front, and he knew how to “Make
America great again.” That catchphrase crystallized his message and rallied his supporters.
Clinton, better on policy specifics than grand narrative, struggled to communicate an
equally focused and compelling message. Her catchphrases included “I’m with her,”
“Stronger together,” “America is already great,” and “Love trumps hate.” They added up to a
fuzzy rationale for her candidacy. In a change election, Trump offered a clearer message of
making things better.

Both campaigns’ efforts to develop a positive image for their candidate were sometimes
overshadowed by efforts to persuade the public that their opponents were terrible leaders
and vile human beings. Trump consistently referred to Clinton as “crooked Hillary” and
labeled her the worst candidate for president in American history. That narrative drew
support from an FBI investigation into Clinton’s use of a personal e-mail server while she
was Secretary of State and from an ongoing drip-drip of e-mails hacked from her campaign
by Russian operatives and distributed through Wikileaks. Clinton supporters believed that
her momentum was seriously damaged when FBI director James Comey announced days
before the election that new e-mails had been discovered that “might be pertinent” to the
investigation. A week later, Comey said that it had been a false alarm, but Democrats
believed the new announcement served only to keep the e-mails in the news.
Although the Democrats got no help from the FBI or Wikileaks, they benefited from a
continuing flow of new material from investigative reporters and from Trump himself to
support their framing of him as a liar, misogynist, racist, and tax cheat who lacked the
judgment and self-control to be trusted in the White House.
Gender was a central issue for the first time in a U.S. presidential election. It both helped
and hindered Clinton. She was a powerful symbol to millions who hoped to see the first
woman president. But leadership has historically been associated with maleness, and
research (that we examine later in this chapter) shows that women who seek high office
often face discrimination and higher expectations than men. Both men and women are
often uncomfortable with women who are powerful or who seem to want power.

In the end, much of the public believed the worst about both candidates—polls suggested
that Clinton was viewed unfavorably by 57 percent of the public and Trump by 62 percent.
Even many Trump supporters feared that he lacked the maturity and steadiness required
in a president. But they saw him as the candidate who could bring change to Washington.
That was enough to make him president.

We begin this chapter with a historical tour of theory and research on leadership,
examining quantitative and qualitative strands that have run in parallel to one another.
This will lead us into an exploration of the idea of leadership—what it is, what it is not, and
what it can and cannot accomplish. We look at the differences between leadership and
power and between leadership and management. We examine the intersection of
leadership with gender and culture. Finally, we explore how each of the four frames
generates its own image of leadership.

Leadership in Organizations: A Brief History
In nearly every culture, the earliest literature includes sagas of heroic figures who led their
people to physical or spiritual victory over internal or external enemies. In Egypt and
China, we find narratives about pharaohs and emperors and the rise and fall of dynasties
that date back thousands of years. Ancient Chinese chronicles tell a cyclical story that
begins when a dynamic leader leverages disorder and discontent and amasses sufficient
force to found a new dynasty. For a time the new dynasty produces vigorous and far-
sighted leaders who create a stable and prosperous state. But eventually corruption
spreads, leadership falters, and the dynasty collapses in the face of a new challenger. Then

the cycle begins anew. This saga still has a powerful resonance in modern China because
the Communist party leaders understand that their dynasty, like all that have come before,
may someday lose the “mandate of heaven.”
From ancient times to the late nineteenth century, the leadership literature consisted
mostly of narratives about monarchs, generals, and political leaders. Then the rise of big
business triggered an interest in the qualities of the giants who founded great enterprises,
like Cornelius Vanderbilt, Andrew Carnegie, J. P. Morgan, and John D. Rockefeller. In the
same era, social science began to separate from philosophy and emerge as a distinct
academic field. Scholars like Harvard psychologist William James and the sociologists
Herbert Spencer in England and Emile Durkheim in France began to lay the intellectual
foundations for a science of society and human behavior based on systematic research.
Out of this ferment emerged two distinct approaches to understanding leadership in
organizations that have coexisted for more than a century, traveling more or less side by
side, with only occasional nods to one another. One track, which we label quantitative-
analytic, emphasizes testing hypotheses with quantitative data to develop leadership
theory. The work is typically published as articles in scholarly journals (an overview of eras
in the evolution of this strand appears in Exhibit 17.1). A second track, qualitative-holistic,
relies on case studies and interviews with practitioners to develop ideas and theory about
how leadership works in practice. Such work is often published in books aimed at an
audience that includes both practitioners and scholars. We will survey quantitative and
then qualitative work before trying to capture the current state of the field.
Exhibit 17.1. A Short History of Quantitative-Analytic Leadership Research.
Leadership Theory Examples Central Idea Current Status
Trait theory: how
are leaders
different?

Galton, 1869;
Terman,
1904;
Kirkpatrick
and Locke,
1991; Zaccaro,
2007

Leaders possess
distinctive personal
characteristics
(intelligence, self-
confidence, integrity,
extraversion, and so on).

Fell out of favor in the
1950s when reviewers
found weak empirical
support, but has returned
to favor in recent decades.

Leadership style
theory: how do
leaders act?

Lewin, Lippitt,
and White,
1939; Likert,
1961;
Fleishman and
Harris, 1962

Leadership depends on
style (democratic vs.
autocratic, task-oriented
vs. people-oriented,
etc.).

Mixed evidence stimulated
move toward contingency
theories, which often
include leader style
variables.

Contingency theory:
how do
circumstances affect
leadership?

Fiedler, 1967;
Lawrence and
Lorsch, 1967;
Evans, 1970;
House, 1971,
1996

Effective leadership
depends on the
characteristics of
followers and context:
what works in one
situation may not work
in another.

No single contingency
view has found consistent
empirical support or wide
acceptance, but most
modern leadership
research incorporates the
idea that leadership

Leadership Theory Examples Central Idea Current Status
depends on
circumstances.

Leader-member
exchange (LMX)
theory: what
happens in the
leader-follower
relationship?

Dansereau,
Graen, and
Haga, 1975;
Graen and
Uhl-Bien,
2008

Leadership is rooted in
the quality of the
relationships between
leaders and individual
followers.

Advocates of LMX theory
have been actively
conducting research since
the 1970s; many LMX
propositions have
empirical support, but the
approach is criticized for
complexity and viewing
leadership too narrowly.

Transformational
leadership theory:
how do leaders
transform followers?

Burns, 1978;
Bass, 1985;
Conger and
Kanungo,
1998

Transformational (or
charismatic) leaders use
inspiration, idealized
influence, and the like to
generate followers’ trust
and willingness to go
above and beyond.

Evidence suggests
transformational
leadership makes a
difference, but more
research is needed on
when and how it works
best.

Quantitative-Analytic Research
Since the early twentieth century, quantitative research has moved through several eras,
gradually evolving from simpler to more complex views of leadership. The initial research,
flowing from the “great man” theory of leadership (Carlyle, 1841), focused on finding the
distinctive traits that made leaders different from everyone else. Around 1950, multiple
reviews (Stogdill, 1948; Gibb, 1947; Jenkins, 1947) concluded that there was little
consistency in leadership traits across people and circumstances. That gave rise to two
lines of research in the 1950s and subsequent decades: one on leadership style and another
on situational contingencies. Style research focused particularly on the difference between
task-oriented and people-oriented leaders. The results suggested that leaders who focused
on people generated higher morale although not necessarily higher productivity, and that
the most effective leaders were good at dealing with both tasks and people (Fleishman and
Harris, 1962).
Contingency theorists examined characteristics of situations that interacted with leader
behavior. One influential line, for example, found that task-oriented leaders did best in
situations that were either highly favorable or highly unfavorable for the leader, while
people-oriented leaders did best in situations in the middle (Fiedler, 1964, 1967).
Another contingency theory, Hersey and Blanchard’s situational leadership model (1969,
1977), had less research support (Hambleton and Gumpert, 1982; Graeff, 1983; Blank,
Weitzel, and Green, 1990) but became more popular with practitioners because it is more
intuitive and offers clearer practical guidance to practitioners. The model incorporates its
own version of the distinction between task and people, using a two-by-two table to
develop four different leadership styles (see Exhibit 17.2). Hersey and Blanchard argued

that each style was appropriate for a different level of subordinate “readiness,” which they
defined in terms of how able and willing subordinates were to do the work. If subordinates
are neither willing nor able, then the leader should tell them how to do the job. If they want
to do the job but lack skill, then the leader should sell or coach to build capacity. When
subordinates are able but unwilling or insecure, then the leader should use a participative
style to build motivation. If they are both able and willing, the leader should delegate and
get out of the way.
Exhibit 17.2. Situational Leadership Model.
High Relationship, Low Task:
Participate
Use when followers are “able” but
“unwilling” or “insecure.”

High Relationship, High Task:
Sell (or Coach)
Use when followers are “unable” but “willing”
or “motivated.”

Low Relationship, Low Task:
Delegate
Use when followers are “able” and “willing”
or “motivated.”

Low Relationship, High Task:
Tell
Use when followers are “unable” and
“unwilling” or “insecure.”

Hersey and Blanchard’s model continues to be popular for leadership training but has been
criticized for lack of research support and for generating self-fulfilling prophesies. If, for
example, managers give unwilling and unable subordinates high direction and low support,
what would cause their motivation to improve? The manager of a computer design team
told us ruefully, “I treated my group with a ‘telling’ management style and found that in fact
they became both less able and less willing.”
The 1970s spawned a new line of research: leader-member exchange theory (LMX). LMX
research began with the insight that leaders create different relationships with different
followers, and, in particular, they create in-groups and out-groups by interacting with some
subordinates in a more personal way while focusing strictly on task with others
(Dansereau, Graen, and Haga, 1975; Graen and Uhl-Bien, 2008). One practical implication
from this research is that leaders can get better results by creating strong relationships
with all, not just some, of their subordinates (Graen and Uhl-Bien, 2008, p. 225).
A major new strand that emerged in the 1980s emphasized a distinction between
transactional and transforming leadership (Burns, 1978). Transactional leadership
involves practical, give-and-take exchanges, such as pay for performance. Transforming
leaders, on the other hand, “champion and inspire followers…to rise above narrow
interests and work together for transcending goals” (Burns, 2003, p. 26). Over the next two
decades, research on transformational, or charismatic, leadership became a dominant
research strand, producing a number of studies confirming that transformational leaders
had a more powerful impact than those who relied only on transactional approaches
(Shamir, House, and Arthur, 1993; Conger and Kanungo, 1998).

Qualitative-Holistic Leadership Studies
The quantitative research tradition has both strengths and limits. Over more than a
century, scholars have tested hypotheses, discarded ideas that don’t work, and gradually
built theory that fits the data. But the work has often simplified the complexities of

leadership by treating only a few variables at a time and by treating leadership as
equivalent to what happens between managers and their subordinates. Qualitative
research on real-world practice has viewed leadership in more nuanced and holistic ways,
often developing ideas decades before they make their way into quantitative studies. Mary
Parker Follett (1896, 1918, 1941), for example, was well ahead of her time in exploring
distributed leadership, charisma, and the importance of the human element. Many of the
major themes in Follett’s work were extended by two of the most influential management
thinkers of the early twentieth century: Elton Mayo and Chester Barnard. Mayo, often
viewed as the founder of the “human relations” school of management, conducted the
famous studies that gave rise to the “Hawthorn effect” and promoted the idea, viewed as
radical at the time, that human and social factors mattered as much as technical and
economic ones (Mayo, 1933).
Chester Barnard, a telephone executive, was a practitioner rather than an academic, but he
wrote one of the most influential management books of the midtwentieth century, The
Functions of the Executive (Barnard, 1938). Barnard argued that the task of leadership is to
balance technical and human factors to achieve cooperation among the many groups and
individuals within an organization. Organizations rarely survive indefinitely, he noted,
because it is so challenging to solve two central issues: achieving goals while satisfying the
needs of those who do the work.
The idea that leadership is about balancing or integrating concerns for task and people
remained a central theme in qualitative work on leadership for the next several decades
(examples include Argyris, 1962; Bennis, 1961; Likert, 1961; McGregor, 1960), but in later
years researchers began to give greater attention to political and symbolic issues in the
workplace (Dalton, 1959; Mintzberg, 1973; Kotter, 1985; Heifetz and Linsky, 2002).
Interest in the symbolic dimension of leadership exploded in the 1980s when students of
organization discovered something long known to anthropologists—organizations had
cultures, and those cultures mattered (Deal and Kennedy, 1982; Peters and Waterman,
1982; Schein, 1992). Symbolic elements such as charisma, vision, and transformational
leadership became dominant themes in discussions of leadership, although Collins and
Porras (1994) and Collins (2001) led a kind of counterrevolution, arguing that charisma
was overrated (Collins and Porras, 1994). Instead, they argued, leaders of successful
companies were disciplined and determined but humble (attributing success to the team,
not to themselves) and even self-effacing. Heifetz and Linsky (2002), focusing particularly
on leadership in the public sector, took a similar position, arguing that the essence of
leadership is not vision but mobilizing followers to work on solving hard problems.

Evolution of the Idea of Leadership
Prior to the twentieth century, leadership was usually equated to high position, and the
dominant theme in leadership studies was that leaders were born with special gifts that
made them different from ordinary mortals. That view is dying, brought down by
leadership research and by the complex challenges of leading in contemporary
organizations. Our tour of more than 100 years of leadership history shows a gradual shift
from a simpler view centered on the individual to a more complex view that takes account
of individual, relationship, and context. Five propositions capture this evolution:

Leadership Is an Activity, Not a Position
Leadership is distinct from authority and position, although authorities may be leaders.
Weber (1947) and Barnard (1938) both linked authority to legitimacy. People consent and
choose to obey authority only as long as they believe it is legitimate. Authority and
leadership are both built on voluntary compliance. Leaders cannot lead without legitimacy,
but many examples of authority fall outside the domain of leadership. As Gardner put it,
“The meter maid has authority, but not necessarily leadership” (1989, p. 7).

Heifetz (1994) argues that authority often impedes leadership because in times of distress
we expect those in authority to know and do more than they can and to solve our problems
for us. This tempts leaders to overpromise and underdeliver, a recurring setup for failure
and disappointment. After the 2016 election, many observers wondered how Donald
Trump would be able to deliver on the many promises that he made during his election
campaign.
The management literature has often equated leadership to whatever managers do with
their subordinates, but this defines leadership too narrowly. Leaders need skill in
managing relationships with all significant stakeholders, including superiors, peers, and
external constituents (Burns, 1978; Gardner, 1986; Kotter and Cohen, 2002; Heifetz and
Linsky, 2002).

Leadership Is Different from Management
You can be a leader without being a manager, and many managers could not “lead a squad
of seven-year-olds to the ice-cream counter” (Gardner, 1989, p. 2). Bennis and