23 Module 23: People in Organizations

If you have a full-time job, you may spend more than one third of your time working at it; many people spend much more than that. The eight hours per day that full-time employment entails is more time than most of us spend on any other activity throughout the day, including sleeping. At our jobs, we are expected to be motivated to work hard, learn new skills, cooperate with our coworkers, coddle our clients, manage subordinates, be managed by supervisors, and handle job stress. Understanding and succeeding at all of these tasks would seem quite an undertaking. To us, it sounds like a job for a psychologist.

As luck would have it, there is a subfield of psychology that addresses these concerns, along with many others that pertain to the psychology of the workplace; it is called Industrial/Organizational Psychology. Industrial/Organizational Psychology (commonly called I-O Psychology) is the primary “non-clinical” applied subfield of psychology. It deals with business applications of psychology, especially workplace applications. I-O psychologists use psychological theory and research to solve real world problems that businesses experience.

I-O Psychology can be roughly divided into two main sub-areas. The first is Human Resources-related topics. I-O Psychologists play important roles in defining jobs, selecting and training employees, and designing compensation and benefits packages that will provide appropriate incentives for employees without breaking the company’s bank. The second sub-area is essentially applied social psychology. Topics include how managers can influence their subordinates, how groups can function effectively on the job, what the causes and consequences of motivation and satisfaction on the job are, and how communication functions in workplaces. At large companies, a Human Resources department handles the functions related to human-resources topics. Managers and other employees are more directly interested in the topics from the applied social psychology side. There is definitely a conceptual overlap between the two sub-areas, however. For example, although policies on compensation and benefits typically come out of a Human Resources department, many individual managers are very aware of how these policies affect workers. In particular, these factors are likely to influence workers’ job satisfaction and motivation, two important topics of the social psychology side of I-O psychology.

According to the 2020 Occupational Outlook Handbook, a comprehensive resource about career descriptions, qualifications, and opportunities published by the US Bureau of Labor Statistics, employment for psychologists in general is expected to grow 14% from 2018 – 2028, much more rapidly than the average career; Industrial/Organizational Psychologists will lead that growth. Although a Master’s degree is required for most Industrial/Organizational psychology careers, you can find related work in the field of human resources with a Bachelor’s degree.

According to the Society of Industrial/Organizational Psychology, a division of the American Psychological Association, I-O Psychologists work in companies’ departments of Human Resources, Employee Relations, Training and Development, and Organizational Development. They can also work as independent consultants. I-O Psychologists who earn a PhD may also be university professors in Psychology, Organizational Behavior, and Management. In short, particularly for those who earn advanced degrees, there are a great many opportunities for careers in I-O Psychology.

This module has four sections. Each section describes an important topic within the subfield of Industrial/Organizational Psychology. Together, the topics will give you a representative sample of the subfield. Section 23.1 describes the important tasks involved in finding the right people for the job and training them to succeed. It is the section from the Human Resources side of the subfield. Section 23.2 covers the important and related topics of motivation and satisfaction on the job. Section 23.3 touches on some of the important issues surrounding communication and influence in the workplace, issues of special (but not exclusive) importance to managers and anyone else who has to get things done by collaborating with others. Section 23.4 closes out the module with a discussion of diversity, an overarching theme in the workplace of the 21^st century.

23.1 Finding the Right Person for the Job

23.2 Making Work Satisfying

23.3 Exerting Influence at Work

23.4 Dealing with Diversity in the Workplace 

READING WITH A PURPOSE

Remember and Understand

By reading and studying Module 23, you should be able to remember and describe:

• Role ambiguity and job analysis (23.1)
• Recruiting and selecting employees (23.1)
• Training: transfer of training, on-the-job training (23.1)
• Motivation from the individual: need for achievement, need for power, need for affiliation (23.2)
• Motivation from characteristics of the job (23.2)
• Increasing intrinsic motivation
• Increasing workers’ job satisfaction: job enrichment (23.2)
• Persuading peers and superiors: ingratiation (23.3)
• Leadership styles: autocratic leadership, democratic leadership, transformational leadership, gender differences in leadership (23.3)
• Bases of power: reward power, coercive power, expert power, referent power (23.3)
• When diversity helps/when diversity hurts (23.4)

Apply

By reading and thinking about how the concepts in Module 23 apply to real life, you should be able to:

• Recognize different job selection techniques (23.1)
• Recognize examples of different bases of power (23.3)

Analyze, Evaluate, and Create

By reading and thinking about Module 23, participating in classroom activities, and completing out-of-class assignments, you should be able to:

• Identify characteristics in yourself or a job that lead to motivation and satisfaction. (23.2)
• Describe how you might try to influence a supervisor, peer, and subordinate (23.2)
• Evaluate leaders you have known with respect to leadership style and bases of power (23.3)
• Describe whether and why your experiences with diversity have been beneficial or harmful (23.4)

23.1. Finding the Right Person for the Job

If you have ever had a job that you hated, then you know how unpleasant the experience can be. The stress and dissatisfaction from work can spill over into your non-work hours and affect your whole life. An organization called Sleep Judge surveyed 1000 employed people in the US (they did not report if it was a representative sample), and found that 81% suffer work-related anxiety on Sunday nights (The Sleep Judge, 2019). Businesses do not like workers to hate their jobs—not out of benevolence but because an unhappy worker can be very expensive. One of the most costly labor issues with which a company must contend is job turnover—in other words, workers leaving. Of course, some turnover is not a problem; for example, the loss of the guy who takes a three-hour nap after lunch every day is probably good for the company. The loss of quality employees, however, is an enormous expense. One way that an organization can keep good employees is to motivate and satisfy them (see section 23.2). Prior to that, however, many smart companies devote particular effort to recruiting, hiring, and training the right people. Industrial-organizational psychologists have been involved in all of these functions.

The first step in finding the right person for the job is to define what the job is; you may be surprised to learn that this step is often neglected. Many people are employed without knowing their exact role and job responsibilities, a situation known as role ambiguity. It leads to high levels of stress and job turnover (Jackson & Schuler, 1985). An essential way to help prevent role ambiguity is to develop a precise definition of a job. Industrial/Organizational psychologists can accomplish this by conducting a job analysis, a detailed description of a job; it can contain information about the types of tasks to be performed, the skills required for a worker to succeed at the job, or both. The benefit of conducting a job analysis goes well beyond simply minimizing the possibility of role ambiguity. A job analysis is the basis for virtually all of the remaining human resources and training functions. For example, if a company discovers a mismatch between the skills of current workers and the skills listed in a job analysis, they know that widespread additional training is needed. Criteria obtained from the job analysis should be the basis for performance appraisals. And, of course, candidates are recruited and selected for a job on the basis of how well they fit the criteria laid out by the job analysis.

Recruiting and Selecting Employees

For many companies, recruitment is far more than simply placing an ad on LinkedIn or Indeed.com. In fact, in one survey, approximately 70% of employers reported that in addition to online resources, they use referrals from current employees, the company’s own website, and word-of-mouth as successful recruitment strategies (Davis, 2017).

If you have ever applied for a job, you have been subjected to at least some of the common job selection techniques that have been developed and evaluated by industrial/organizational psychologists. Application blanks, interviews, and psychological tests (e.g., intelligence, skills, personality, and integrity tests) are among the most common selection techniques used throughout the business world. In order for an employer to use a selection technique it must be reliable (consistent) and valid (measure what it is supposed to measure), two concepts you should recall from Module 8. Although companies might choose to ignore the reliability and validity of their selection tools, doing so opens them up to the risk of losing a discrimination lawsuit. You may be surprised and a bit dismayed to learn that, from a legal standpoint, the validity of a selection technique need not be high. In essence, as long as a specific technique allows a company to choose a successful employee better than selecting candidates at random and does not systematically reject members of minority groups at higher rates, it can be used.

For many years, personality tests were great examples of selection techniques that just barely made the grade (Schmidt et al. 1984). In fact, for many years, companies were afraid to use them because of their low validity and the consequent threat of lawsuits. Personality tests such as the MMPI-2 or Myers-Briggs Type indicator do a famously poor job of predicting job success. More recently, companies have grown more confident in the validity of personality tests, however. Refinement of the Big Five personality traits has been a big reason for the newfound confidence. Conscientiousness in particular is a strong predictor of job success (Hurtz & Donovan, 2000). The four remaining Big Five traits—agreeableness, extraversion, openness, and neuroticism (emotional stability)— also have acceptable levels of validity for many jobs (Caldwell & Burger, 1998; Salgado, 2003; Tett et al., 1991).

Another surprise for most people is that one of the most common job selection techniques is very poor. Personal interviews, at least the way they are traditionally conducted, have notoriously low validity (Hunter & Hunter, 1984; McDaniel et al., 1994). In order for an interview to be successful at predicting future job performance, it should be based on behavior (i.e., the candidate should be asked questions about how he or she acted or would act in various situations), and the answers should be scored based on a job analysis (Day, 2003; McDaniel et al., 1994; Taylor & Small, 2002). A great many interviews are conducted by managers—often not even human resource managers—who ask any questions they want and use their own criteria to judge the quality of candidates’ answers. Researchers have consistently found that this type of interviewing strategy does a very poor job of predicting future performance (McDaniel et al., 1994).

Even before the 2020 COVID-19 shelter-in-place orders across the US made it necessary to conduct job interviews remotely, this practice was already common. At some point you will stop being surprised by our revelations, but here is another. There is little research about the effectiveness, and possible biases introduced, by using selection techniques that allow little (computer-mediated) or no (phone) visual feedback. And the research that does exist suggests that these technologies can change the decisions that hiring managers would make (McColl & Michelotti, 2019; Silvester & Anderson, 2003).

Training Employees

An undergraduate student we knew committed an interesting symbolic act when he finished his last class before graduation. He piled up his notes and papers (and some textbooks that he could not sell) and made a small bonfire out of them. His message was clear, in part because he chanted over and over, “I am done with classes, FOREVER!” We do not condone this act. First, of course, there is the issue of the safety of setting your books and papers on fire; he was, after all, indoors at the time. More to the point, however, the soon-to-be-former student was probably wrong. You have by now heard the term “lifelong learner.” Given the rapid changes that take place in technology and in the world economy, and the reduced tenure that people have at any particular job compared to decades past, it has become necessary for the vast majority of people to continue to learn throughout their lives. A lot of that learning takes place in the context of a specific job, during training, and industrial/organizational psychologists have been involved in virtually all aspects of training.

Psychology in general, of course, should have a great deal to say about training. Principles gleaned from the study of learning and memory, thinking, and problem-solving have been very useful for companies that hope to train their employees to succeed. For example, principles of operant conditioning have played an important role in many training programs. One of the most important concepts to come from psychology is transfer of training, the degree to which training carries over to other situations, such as the job itself. Psychologists have discovered that in order to promote positive transfer, the training needs to take place in situations that match the job as closely as possible (Allen, Hays, & Buffardi, 1986). It is also important to ensure that the workers have many opportunities to use on the job the new behaviors that they have learned (Ford, Quinones, & Sego, 1992; Tracey, Tannenbaum, & Kavanagh, 1995).

Industrial/organizational psychologists have devoted a lot of effort to comparing different formats of training. In a notable parallel to what they discovered with respect to the usefulness of interviews, psychologists have concluded that on-the-job training—one of the most common training methods—is probably not the best training technique. Essentially, with on-the-job training, the new worker shows up, and for the first few days, a more senior worker teaches him or her how to do the job. Employers often prefer this kind of training because it seems very inexpensive. After all, the other worker is already on the job being paid, and the new worker can begin being productive right away. Also, it seems as if on-the-job training should promote positive transfer because training cannot get more similar to the job situation than this. There are hidden costs, however, that make on-the-job training much less efficient than it seems. First, the trainer is probably not doing his or her own job during the training period. Second, the trainer probably does not really know how to teach, so the new employee may not learn the job very well. The result is that he or she takes longer to become productive than if some kind of off-site training had been provided instead. Even after the worker has been on the job for some time, those who had undergone on-the-job training tend to be paid and promoted less than those who had other types of training (Kovach & Cohen, 1992).

23.2. Making Work Satisfying

Chances are you have a job to help you get through college. For nearly all of you, however, your current job is just that, a job; it is a way to pay the bills. You may very well enjoy the job (often because of a pleasant boss or co-workers), but there is likely not anything deeper than that. How does that attitude coexist with the idea that a person’s career is one of the key elements of his or her identity (Erikson, 1959)? It might help to distinguish between a job (“what you do”) and a career (“part of who you are”).

Many factors contribute to the shift from thinking in terms of job to thinking in terms of career, such as the length of time you expect to work in the field and your feelings of loyalty toward the company. In this module, we will describe two factors: motivation and job satisfaction. The question is not simply whether you are motivated and satisfied, but rather what motivates and satisfies you about a particular job. The answers to those questions reveal much about whether your employment is a job or a career.

Motivation on the job is complex and determined by many factors. They can be roughly categorized as motivational factors that come from the individual, factors that come from characteristics of the job, and factors that are an obvious interaction of worker and job characteristics.

Motivation from the Individual

Maslow’s hierarchy of needs (Module 20) was one of the first theories used to explain motivation on the job; researchers soon discovered that it was limited, however, and in many cases completely wrong. For example, suppose you are driven by a need to connect with people socially on your job, a need most clearly related to Maslow’s “belongingness” needs. You may very well seek out a position that would allow you to fulfill that need. Once you got that job, however, it seems unlikely that the need would dissolve and stop motivating you, which is key part of Maslow’s theory. Maslow’s emphasis was how people are motivated to continue up his hierarchy once they have satisfied a need. In reality, however, the satisfaction of a need often makes it a stronger motivator rather than eliminating it (Alderfer, 1969).

Other psychologists have noted stable differences in motivation among individuals that are not related to any kind of progress through a hierarchy. Rather, it seems that people have different motivation needs, that these differences may be considered personality differences, and that the differences determine what motivates people in the workplace. For example, one influential theory has proposed that there are three needs that are important elements of job motivation: need for achievement, need for affiliation, and need for power (McClelland, 1975). People who are high in need for achievement set high standards for themselves, and they work hard to achieve those standards. They thrive in situations that provide frequent feedback about success and are moderately challenging. Of course, then, they will seek out these situations at work, and they tend to be very successful. People who are high in need for power are motivated by the desire to influence others. They seek opportunities in the workplace to gain positions in which they can direct other people (McClelland, 1970). People who are high in need for affiliation are similar to people whom Maslow would describe as satisfying their belongingness needs; in essence, they seek workplace situations that will allow them to satisfy their need for interpersonal relationships. Again, however, they will not “outgrow” this need once it is satisfied because the need is part of their personality.

Motivation from Characteristics of the Job

Other psychologists have focused on the particular characteristics of jobs that lead to motivation. For example, jobs that are meaningful, provide a high degree of autonomy, allow a worker to draw from a wide variety of skills, allow a worker to complete an entire task (rather than being an anonymous “cog” in a giant operation), and provide frequent feedback are motivating for many people (Hackman & Oldman, 1976). In our view, it is these job characteristics, particularly the meaningfulness, that mark the distinction between a job and a career. By the way, research has also shown that if college classes are restructured to have these characteristics, students are more motivated as well (Cantanzaro, 1997).

Motivation from Interactions Between Individual and Job Characteristics

If you recall the discussions of intrinsic and extrinsic motivation in section 20.1, you may realize that these concepts should apply to the workplace as well, and indeed they do. Because intrinsic motivation, motivation coming from within the individual, leads to high performance and is essentially free to the company compared with extrinsic motivators like bonuses and perks, many organizations strive to increase their employees’ intrinsic motivation. Organizations can increase their workers’ intrinsic motivation by providing challenging tasks, encouraging them to satisfy curiosity, and giving them a sense of control over work tasks (Lepper & Cordova; 1992; Malone & Lepper, 1987). Positive performance feedback or praise also increases intrinsic motivation, unless the worker perceives that the feedback is delivered in a controlling manner (Deci 1972; Pittman, et al., 1980; Vansteenkiste & Deci, 2003). Also, followers are likely to be intrinsically motivated if they believe that their leader is also intrinsically motivated (Wild et al., 1992).

Job Satisfaction

Perhaps the most surprising observation about job satisfaction, and one of the most often-repeated findings in industrial/organizational psychology, is that job satisfaction is only weakly related to job productivity (Iaffaldano & Muchinsky, 1985). For many years, it was simply assumed that if you are satisfied on the job, you will try to perform your work conscientiously and well. Although this assumption is likely correct, there are many other reasons why you might work hard and be productive. For example, if you fear that you will lose your job, you will probably be productive regardless of how satisfied you are. Beyond productivity, however, there are several additional reasons for an organization to enhance the job satisfaction of its employees. Workers who have high satisfaction tend to be committed to the organization, and they have lower rates of absenteeism and quitting (Jenkins, 1993; Ostroff, 1993; Pratkanis & Turner, 1994; Williams & Hazer, 1986).

Because of the positive outcomes associated with high job satisfaction, many organizations seek to enhance it. One strategy that organizations have used is to increase employees’ levels of responsibility and independence; it is called job enrichment. One important element for increasing satisfaction is to increase employees’ perceptions of fairness, especially with regard to pay (Miceli, 1993; Witt & Nye, 1992). Many organizations also increase their employee’s satisfaction through benefits, such as flexible working hours, on-site child care, healthcare coverage, retirement plans, and profit-sharing.

Although many efforts to increase satisfaction are successful, there are limits to what the organization can accomplish because some elements of job satisfaction come from the workers themselves. In other words, some workers are likely to be dissatisfied no matter what the organization does. There is increasing evidence that workers with certain personality types—such as high alienation (feeling isolated and lonely)—will probably have low job satisfaction regardless of what the employer does and that these personality variables may even be genetic (Efraty & Sirgy, 1990; Keller et al., 1992). In addition, personality differences among workers suggest that different aspects of a job lead to satisfaction, so a one-size-fits-all approach to increasing job satisfaction will not work for all employees (Pierce et al., 1993).

23.3. Exerting Influence at Work

On the job, your behavior toward a goal is often energized and directed by another person. Broadly, we can think of one person’s efforts to get someone to do something as influence. Much of the information from section 22.5, then, generally applies to the workplace. If you are trying to influence a peer or someone who has authority over you, psychologists refer to your efforts as persuasion. But instead of referring to the influence exerted by an authority figure as obedience (as in section 22.5), industrial-organizational psychologists usually call it exerting power. This terminology shift allows psychologists to focus on the behaviors and characteristics of the leader who is trying to do the influencing rather than the person being influenced, as in the classic social psychological research.

Let us clarify the difference between persuasion and power (or obedience) with some examples:

• Your co-worker friend wants you to take the afternoon off on a beautiful spring Friday so that the two of you can go to a baseball game. His attempts to talk you into going to the ballgame would be persuasion.
• You would never take the afternoon off on a beautiful spring Friday to go to a baseball game because you are an extremely conscientious worker. And you are vastly underpaid and deserve a raise. Your attempts to get your boss to agree with these ideas would also be persuasion.
• Your boss finds out that your friend skipped work to go to the baseball game, and she threatens to fire him if he ever does it again. Her attempts to influence him to stay at work by issuing this threat would be using power.

Persuasion

Of course, persuasion in the workplace is very much like persuasion in other areas of life, so the principles from section 22.5 apply to this section as well. Perhaps the most important observation about persuasion as it pertains to the workplace specifically is that different kinds of strategies are needed to influence peers and superiors. In general, persuading superiors sometimes requires the use of more indirect methods, or the use of peripheral cues, whereas efforts to persuade peers can be more direct, involving the central route.

One specific type of peripheral technique that employees can use with superiors is called ingratiation, trying to make oneself more appealing by using flattery or doing favors, for example (Kumar & Beyerlein, 1991). If an employee is trying to persuade his boss to give him the day off, he is likely to use ingratiation, perhaps by commenting on the attractive picture of her children on her desk. On the other hand, if he is trying to convince his boss to change some institutional policy, a proposal that the boss is likely to scrutinize closely, he is likely to employ the central route to persuasion (Ansari & Kapoor, 1987; Schmidt & Kipnis, 1984). Peers sometimes use ingratiation with each other, as well as offering to exchange favors (Kipnis et al., 1980).

Power and Leadership

You might be tempted to think that exerting power would be a snap compared to trying to persuade someone who does not have to listen to you. As Mel Brooks quipped in the movie The History of the World, Part I,“It’s good to be the king!” Although there are obvious advantages to being able to compel subordinates to follow your orders, it not as simple as it seems. You may be able to get your underlings to fetch your dry cleaning today, but what is to stop them from revising their resumes on company time and interviewing for a new job during their lunch hours? Workers who are subjected to poor leadership and exertion of power are not simply more likely to quit. They may suffer more stress, be absent more, be less intrinsically motivated and productive, and engage in negative behaviors, such as stealing or sabotaging company property or sharing confidential information with competitors. Perhaps we should mention that the Mel Brooks character we quoted above is King Louis XVI, the king of France who was beheaded in 1793 after being overthrown in the French Revolution. Maybe it is better to say, “It’s good to be a good king!”

When a manager of other workers learns effective skills for leading and exerting power, subordinates will comply with directives with little risk of negative consequences; in many cases, the subordinates will not even feel as if they are following orders. Leaders’ success often comes from using principles of leadership and management that have been uncovered by industrial/organizational psychologists.

Leadership styles

Years ago, many psychologists believed that leadership was a quality that came naturally to some people, that great leaders are born, not made. If you were not fortunate enough to be born with leadership ability, you were destined to be one of the myriad anonymous followers. Although many people outside of psychology still believe that leaders are born and not made, a great deal of research has shown the opposite. Today, it is widely accepted throughout I/O psychology that leadership is a set of skills that can be learned like any other. Because leadership is a learnable skill, you should also realize that one can be a leader in many different situations, at work, in the family, in social circles, at school, and so on. Being a leader in one situation does not automatically mean that you will be one in other situations.

Many different styles of leadership exist. Perhaps the most important distinction is between autocratic and democratic leadership. You should think of these labels as the extreme ends of a dimension, with individual leaders lying somewhere along the dimension. Autocratic leadership, sometimes called directive or authoritarian leadership, is leading through ordering; the leader does all of the decision-making. In democratic leadership, sometimes called participatory leadership, the leader shares some of the power and allows subordinates to participate in decision making. Although you may have an intuition about which style would make the best leader, the truth is it depends on the situation and the people being led (Fiedler & House, 1994). For example, autocratic leadership may be necessary when decisions need to be made quickly or when the subordinates have insufficient knowledge or cannot reach decisions collaboratively. In situations in which subordinates work well together and are knowledgeable, democratic leadership will usually fare better.

One generally effective leadership style that psychologists have researched is transformational leadership. Under a transformational leader, followers set aside their personal goals and adopt the goals of the organization as their own. In other words, they are transformed into the ultimate team players (Bass, 1990). Transformational leaders treat their followers as individuals, and they provide intellectually challenging situations and encourage creativity. They are likable and have low levels of aggressiveness and criticism (Bass, 1985; Ross & Offerman, 1997). As you might guess, transformational leadership is linked to very good performance (Barling et al., 1996; Eagly et al., 2003).

Most people are aware of (and many believe) the stereotype that men are better leaders than women. After all, just look at the corner offices of virtually all of the big companies and the political leadership throughout the world. There is only one problem with the stereotype, however. It is wrong. In general, men and women are quite similar in their leadership behaviors; often, the stereotypic differences are observed in laboratory research only and not in research that is done in the workplace. Women do tend to use a democratic style of leadership more than men, who tend toward autocratic leadership (Eagly & Johnson, 1990). Neither style is clearly better than the other in all situations, however. The one area in which there is a consistent, albeit small, advantage for one gender is in the use of transformational leadership, perhaps the most effective leadership style, and here the advantage goes to the women (Eagly et al., 2003).

Bases of power

In addition to having a style of leading, leaders have different bases, or sources, of power. Four bases of power are especially important:

• Reward power is the ability to offer incentives, or rewards, if subordinates follow orders. Supervisors may have the ability to recommend or grant raises, give promotions, offer choice assignments, or give a worker the first option for vacation time, for example.
• Coercive power is the ability to threaten punishments if orders are not followed. Supervisors can fire or demote, verbally reprimand, or give poor performance evaluations, for example.
• Expert power is when the subordinates believe that the leader has greater knowledge about the important tasks involved in the job, as, for example, when students believe that a professor knows a great deal about his or her subject matter.
• Referent power is when the subordinates look to the leader as a role model; in other words, they identify with and like the leader.

Many leaders rely on reward and coercive power because they are such direct methods of exerting influence. They are reluctant to rely on expert and referent power because they fear that subordinates will not comply if they are not being compelled or otherwise encouraged by tangible incentives or threats. Research, however, has shown otherwise. For example, some research on the effectiveness of reward power has found no relationship between pay incentives and performance; some research has even found a negative relationship in some situations (Amabile et al., 1986; Asch, 1990; Pearce et al., 1985). Other researchers have found a positive relationship, however, perhaps because the monetary awards help workers to set goals for what they want to achieve (Abowd, 1990; Leonard, 1990; Locke & Latham, 1990). Research on the effectiveness of coercive power has been quite a bit more definitive. Although the threat of punishment can lead to high performance, it is also associated with high levels of job dissatisfaction, which can lead to absenteeism and turnover, among other ills (Hinkin & Schriesheim, 1989; O’Reilly & Weitz, 1980). On the other hand, leaders who use expert and referent power have highly motivated subordinates. Importantly, the subordinates also have high satisfaction and positive attitudes about the leader and the job (Podsakoff & Schriesheim, 1985; Rahim & Afza, 1993). In essence, leaders who wield expert and referent power, like transformational leaders, are able to get their subordinates to want to comply. We have little doubt that there is a time and a place for reward power and coercive power, but relying on them exclusively may leave little room for applying two of the most effective leadership tools.

23.4. Dealing with Diversity in the Workplace

There are two ways to think about diversity related to the workplace. One way is that organizations have to avoid discrimination against minority groups of employees. Although laws exist to protect disadvantaged groups, discrimination is pervasive, and it extends to non-protected groups as well. A more beneficial way to think about the issue is to turn diversity into a strength that can be leveraged. Many people dismiss sensitivity to diversity as “political correctness.” What these people do not realize is that:

• As current trends continue in the US and across the world, it will become essential for all of us to learn how to interact with diverse groups of people.
• Successfully coping with diversity helps companies to make more money.

Increasing diversity is a fact of life. In 1950, men were 70% of the workforce in the US; in 2019, they were only 53%. As recently as 1980, White, non-Hispanic workers made up 82% of the workforce; by 2000 it had dropped down to 73%, before creeping back up to 78% in 2019. The ethnic composition of the workplace is expected to continue to change substantially over the next 30 years (Toossi, 2002):

Although we typically think of diversity in terms of gender and race, there are many types of diversity. For example, disability, age, and sexual orientation are protected from discrimination by law. Some of these less publicized kinds of diversity will be increasing as well. For example, by the year 2050, workers aged 55 and up will increase to 20% of the workforce. In addition, there is diversity in personality traits, problem-solving preferences, communication styles, abilities, and skills.

In short, no type of diversity seems to be decreasing, and much of it is increasing. To be successful, individuals must learn to work with people who differ from them in important ways, and organizations must learn how to cope with an increasingly diverse employee base.

Poor Management of Diversity Hurts Workers and Organizations

Given the prevalence of stereotypes, prejudice, and discrimination in society as a whole, it is not surprising to find significant problems in the workplace as well. Members of ethnic minority groups report higher levels of job stress and negative experiences than majority-group members do and lower job satisfaction, involvement, and psychological well-being (Forman, 2003; Mor Barak et al., 2003). Although women overall may not suffer as much as ethnic minorities (research is inconsistent), a lack of respect for gender diversity can lead to an environment ripe for sexual harassment. Even when the target of harassment does not realize that she is being harassed, the result may be reduced job satisfaction and psychological well-being and increased job stress (Fitzgerald et al., 1997). In fact, both men and women report reduced well-being when they work in a climate that is hostile to women (Miner-Rubino & Cortina, 2004).

The negative effects of discrimination, combined with the increasing diversity of the workforce, suggest that it makes good business sense to be sensitive to diverse workers. First, overt job discrimination and sexual harassment are illegal and can lead to multimillion-dollar penalties against a company (when plaintiffs are allowed to join together and form a class-action lawsuit). For example, the Coca Cola Company paid a remarkable $192 million in 2000 to settle a racial discrimination lawsuit. Companies including Ford, BMW, Walmart, Target, and Google have paid millions in individual lawsuits over the years.

Less dramatically, but perhaps more importantly, researchers have shown that genuinely valuing diversity does not simply help a company to avoid penalties but also helps it to achieve its goals. In other words, diversity is not an inconvenience to which we must adapt but a strength that we can harness. There are distinct advantages to diversity in work groups (in school and career) if it is managed appropriately. In 1995, the Glass Ceiling Commission, a large-scale research project commissioned by the US government to assess the state of ethnic minority and gender issues in the workplace, found that companies with strong records of promoting women and ethnic minorities had double the return on investment of those with poor records.

When Does Diversity Hurt and When Does It Help?

The benefits of diversity are not automatic. You cannot simply throw diverse groups together, make sure there is no overt discrimination, and hope for the best. Many people have horror stories about a work or school group composed of very dissimilar members that disintegrated or exploded. Diversity, like any powerful force, must be managed. Think of a physical analog, rushing water. When unmanaged, a large amount of rushing water is called a flood, and it is a catastrophic event. When harnessed, however, rushing water can be used to generate electricity.

Stereotypes and discrimination, harassment, unhealthy working conditions, and poor group performance are the “flood” of unmanaged diversity. Traditional stereotypes and biases flourish when diversity is not valued and managed. For example, consider age. As you saw in Module 16, people’s common beliefs about cognitive decline as we age are greatly exaggerated. Many people hold the stereotyped belief that older workers’ performance suffers as the years pass. Performance evaluations that allow supervisors to make subjective judgments about workers are particularly prone to age-related bias (Miller et al., 1990). In fact, however, research that examined workers in over 100 different occupations showed that older workers’ performance declined only for certain clerical jobs, such as keyboarding or taking dictation. And because increasing age is often associated with increasing experience, older workers tend to make better decisions and work more efficiently than younger workers in many cases (Aviolio et al., 1990).

Similarly, inaccurate stereotypes about women, racial and ethnic minorities, and lesbians and gay men abound in situations in which diversity is not valued. For example, people commonly believe that women make poorer leaders than men. The truth is, however, that men and women are more alike than different in their leadership abilities and that when there are advantages for one gender, they often depend on the type of situation, as you saw earlier in this module (Eagly and Johnson, 1990; Eagly et al., 2003).

Some kinds of diversity have been associated with poor group performance and functioning. For example, age diversity has been linked with higher turnover and absenteeism and lower innovation (Cummings et al., 1993; Wiersema & Bird, 1993; Zajac et al., 1991). In general, diversity tends to be associated with turnover and absenteeism (Jackson et al., 1991). Ethnic diversity has been related to lower group commitment and lower group performance in some cases (Kochan, et al., 2003; Riordan & Shore, 1997).

When organizations know how to use it, however, diversity leads to better group performance. For example, if the organization can enhance group members’ beliefs that they depend on each other to complete the task, diverse groups perform very well, especially if the groups stay together for a long time (Sargent & Sue-Chan, 2001; Schippers et al., 2003). Also, increasing group cohesion and highlighting similarities that group members share leads to positive outcomes (Jenn et al., 1997; Sargent & Sue-Chan, 2001). Other strategies for harnessing group diversity include creating and encouraging a group identity, addressing stereotypes, and learning how to manage conflict constructively (Johnson & Johnson, 2003). Although there is still much that researchers do not know about how to gain the maximum benefit from diversity, recent results such as these have shown that we are on the right track (Williams & O’Reilly, 1998).